TAXATION: Percentage Tax R.C.

Pendon

OTHER PERCENTAGE TAX

Summary of Other Percentage Tax Rates
Coverage Taxable Base Tax Rate
Non-VAT registered persons Gross sales /receipts 3%
Domestic carriers and keepers of garages Gross receipts 3%
International air/shipping carriers doing Gross receipts on transport of 3%
business in the Philippines cargo from the Philippines to a
foreign country
Franchise grantees:
 Gas and water utilities Gross receipts 2%
 Radio and television broadcasting
companies whose annual gross Gross receipts 3%
receipts of the preceding year do not
exceed Php10,000,000 and did not
opt to register as VAT taxpayer

Overseas dispatch, message or conversation Gross Receipts 10%

originating from the Philippines
Banks and non-bank financial Interest, commissions, and discounts from
intermediaries performing quasi-banking lending activities as well as income from
functions financial leasing, on the basis of remaining
maturities of instruments:
•  If maturity period is 5 years or 5%
less
•  If maturity period is more than 1%
5 years
Dividends and equity shares and 0%
net income of subsidiaries
Royalties, rentals of property, real 7%
or personal, profits from exchange
and all other items treated as
gross income
Net trading gains within the 7%
taxable year of foreign currency,
debt securities, derivatives, and
other similar financial
instruments
Other non-bank financial intermediaries Interest, commissions, discounts, 5%
and all other items treated as
gross income under the Tax Code,
as amended
Interest, commissions, discounts from lending
activities, as well as income from financial
leasing on the basis of remaining maturities of
instruments:
•  If maturity period is five years 5%
or less
•  If maturity period is more than 1%
five years
Sale of Shares of stock through the local Gross selling price 0.6%
stock exchange
Life Insurance Total premiums collected 2%
Company/Agent/Corporation (except purely

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cooperative companies or associations)

Agents of foreign insurance companies (except reinsurance premium):
Insurance agents authorized under the Total premiums collected 4%
Insurance Code to procure policies of
insurance for companies not authorized to
transact business in the Philippines
Owners of property obtaining insurance Total premiums paid 5%
directly with foreign insurance companies
Proprietor, lessee, or operator of the following:
Cockpits Gross receipts 18%
Cabarets, Night or Day Clubs, videoke bars, Gross receipts 18%
karaoke bars, karaoke televisions, karaoke
boxes and music lounges
Boxing exhibitions Gross receipts 10%
Professional basketball games Gross receipts 15%
Jai-alai and racetrack Gross receipts 30%
Winnings on horse races · Winnings or 'dividends' 10%
· Winnings from double 4%
forecast/quinella and trifecta
bets
· Prizes of owners of winning 10%
racehorses

Characteristics of OPT
1. It is imposed on business transactions
2. It follows the consumption/destination principles
3. Indirect Tax
4. Privilege tax
5. Ad valorem tax
Marginal Income Earner (MIE)
MIE are subject to income taxes but exempt from payment of business taxes. An
individual is considered an MIE if he:
1. Not deriving compensation from employment
2. Not a licensed professional, consultant, artist, sales agent, broker, and others
similarly situated, including all others whose income have been subjected to
withholding taxes
3. Whose activities are principally for subsistence or livelihood that do not realize
gross sales or receipts exceeding P100,000 in any 12-month period.
MIEs may include the following:
a. Sari-sari stores
b. Agricultural growers/producers, and farmers/fishermen selling directly to
ultimate consumers
c. Carinderias
d. Drivers/operators of a single unit tricycle
SEC. 116- TAX ON PERSONS EXEMPT FROM VAT (3% OF GROSS RECEIPTS)

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Covered Persons:
Non-VAT registered persons who do not exceed the P3,000,000 VAT threshold.
VAT exempt transactions are also exempt from OPT. Hence, if a seller of
vegetables is not liable for VAT and OPT no matter if they are above/below the
VAT threshold.
Under the CREATE Law, the percentage was temporarily reduced to 1% from
July 01, 2020 to June 30, 2023.

Date Tax Rate

June 30, 2020 and before 3%
July 01, 2020 – June 30, 2023 1%
July 01, 2023 onwards 3%

Sale to Government
Sale to the Philippine Government by a non-VAT business is subject to the
following withholding taxes by the government:
1. 3% withholding percentage tax
2. Creditable withholding income taxes of:
a. 1% on purchase of goods
b. 2% on purchase of services

Sec. 117- Percentage Tax on Domestic Carriers (3% of gross receipts)

The Tax Court ruled in that case that the mere sale of tickets, unaccompanied by the
physical act of carriage of transportation, does not render the taxpayer therein subject
to the common carrier's tax. The common carrier's tax is an excise tax, being a tax on
the activity of transporting, conveying or removing passengers and cargo from one
place to another. It purports to tax the business of transportation. Being an excise tax,
the same can be levied by the State only when the acts, privileges or businesses are
done or performed within the jurisdiction of the Philippines. (Commissioner of Internal
Revenue v. British Overseas Airways Corporation, 149 SCRA 395)
Covered Persons:
1. Cars for rent or hire driven by lessee
2. Transportation contractors
3. Persons who transport passengers for hire
4. Other domestic carriers by land for the transport of passengers
5. Keepers of garages
Exempt:
1. Owners of bancas
2. Owners of animal-drawn two wheeled vehicle
3. Gross receipts from incoming outgoing

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Minimum Quarterly Gross Receipts:

1. Jeep for hire
a. Manila & other cities- P2,400
b. Provincial- P1,200

2. Public Utility Bus

a. Not exceeding 30 passengers- P3,600
b. 30-50 passengers- P6,000
c. Exceeding 50 passengers- P7,200

3. Taxis:
a. Manila & other cities- P3,600
b. Provincial- P2,400

4. Car for hire (w/out chauffeur) – P1,800

5. Car for hire (w/ chauffeur) – P3,000
Tax on Transportation Network Companies (TNCs) i.e., Uber, Grab
Terms:

 TNCs- a pool of land transportation vehicles whose accessibility to the

riding public is facilitated through the use of a common point of contact
which maybe in the form of text, telephone and/or cellular calls, email,
mobile applications or by other means.

 Partners- owner of the vehicles, other than the TNC, used in

transporting passenger and/or goods in the TNC.
Rules:
RMC 70-2015 provides that TNCs and/or the Partners may or may not have
been granted a Certificate of Public Convenience (CPC). If it is a holder of a
valid and current CPC, it is known as a common carrier and its gross
receipts are subject to the Three Percent (3%) common carriers’ tax under
Section 117 of the NIRC. Otherwise, it is classified as a land transportation
service contractor and is subject to the Twelve Percent (12%) VAT.
Has CPC = 3% Common Carrier’s Tax No CPC= 12% VAT

Sec. 118- Percentage Tax on International Carriers (3% of gross receipts)

Covered Persons:
1. International air carriers doing business in the PH
2. International shipping carriers doing business in the PH
Tax Base

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Based on the quarterly gross receipts from the transport of cargo from the
Philippines to another country.

Summary of Sec. 117 & Sec. 118

Land Air & Sea

Domestic destination:
 Passengers Common carrier’s tax (3%) 12% VAT
 Cargo 12% VAT 12% VAT
International destination:
 Passengers
Domestic Corp. 0% VAT
Foreign Corp. Exempt
 Cargo
Domestic Corp. 0% VAT
Foreign Corp. 3% OPT

SEC. 119- TAX ON FRANCHISE

A franchise is a special privilege to engage in certain acts that is conferred by the
legislature on an individual or a corporation.
Radio and/or television broadcasting companies
there shall be levied, assessed, and collected in respect to all franchises on radio
and/or television broadcasting companies whose annual gross receipts of the
preceding year do not exceed P10,000,000 a tax of three percent (3%). When the
company exceeded the P10M threshold, it is now mandatory to registration as a VAT
taxpayer applies within 30 days from the end of the taxable year.
Radio and television broadcasting companies also have an option to be registered as a
value-added taxpayer even if they did not exceed the P10M threshold. But once the
option is exercised it is irrevocable.
Illustration:
Radio Jako is a non-VAT registered entity. They reported the following during the
following years:
Radio
Advertising Rental Receipts Other Receipts Total
Year 1 P 4,000,000 P 1,200,000 P 300,000 P 5,500,000
Year 2 7,500,000 2,600,000 850,000 10,950,000
Year 3 11,000,000 3,300,000 1,300,000 15,600,000

How much is the total business tax due for each year?
Solution:

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 Year 1 = P 5,500,000 x 3% franchise tax = P 165,000

 Year 2 = P 10,950,000 x 3% franchise tax = P 328,500 (note 1)

 Year 3 = P 15,600,000 x 12% VAT = P 1,872,000

Note 1: On year 2, the 3% franchise tax shall be applied even if gross receipts
exceeded P10M because the rule is NOT the current year, but the PRECEDING
year. Hence only if the previous year exceeded P10M then the current year will be
subject to VAT just like what happened in Year 3.

Gas & water utilities

A tax of two percent (2%) on the gross receipts derived from the business covered by
the law granting the franchise on gas, and water utilities.

Illustration:
Sakit Ulo Ko Corp. is a grantee of several franchises. Their gross receipts during the
year included the following:
From water franchise P 7,000,000
From electric franchise 9,000,000
From internet franchise 8,500,000
From gas franchise 12,000,000
From other franchises 7,500,000
Total P 44,000,00
How much is the franchise tax for the year?
Solution:
From water franchise P 7,000,000
From gas franchise 12,000,000
Total 19,000,000
Franchise Tax Rate 2%
Franchise Tax Due P 380,000

Gross receipts from other franchises shall be subject to 12% VAT.

SEC. 120- TAX ON OVERSEAS COMMUNICATION

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Covered Persons:
o Every overseas dispatch, message or conversation originating from the
Philippines.
o Tax rate of 10% on the amount paid for the services

Exemption:
1. Government
2. Diplomatic Services
3. International Organizations
4. News Services

Sec. 121- Gross Receipt Tax (GRT) on banks and Quasi-Banks

There shall be collected a tax on gross receipts derived from sources within the
Philippines by all banks and non-bank financial intermediaries performing quasi-
banking functions in accordance with the following schedule:
a) Interest, commissions, and discounts from lending activities as
well as income from financial leasing, on the basis of remaining
maturities of instruments:
 If maturity period is 5 years or less 5%
 If maturity period is more than 5 years 1%

b) Dividends and equity shares and net income of subsidiaries 0%

c) Royalties, rentals of property, real or personal, profits from

exchange and all other items treated as gross income 7%

d) Net trading gains within the taxable year of foreign currency, debt 7%
securities, derivatives, and other similar financial instruments

In the case of financial leasing, the taxable gross receipts shall consist of the interest
income only.
In case pretermination of long-term loans and financial leasing, the maturity period
shall be reckoned to end as of the date of pretermination for purposes of classifying
the transaction and the application of the correct tax rate.

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What is quasi-banking?
According to the Manual of Regulation of Banks issued by the BSP, the essential
elements of quasi-banking are:
a. Borrowing funds for the borrower’s own account;
b. Twenty (20) or more lenders at any one (1) time;
c. Methods of borrowing are issuance, endorsement, or acceptance of debt
instruments of any kind, other than deposits, such as acceptances,
promissory notes, participations, certificates of assignments or similar
instruments with recourse, trust certificates, repurchase agreements, and
such other instruments as the Monetary Board may determine; and
d. The purpose of which is:
i. relending, or
ii. purchasing receivables or other obligations.

Is the BSP covered by this tax?

No. the BSP is not bank nor a non-bank financial intermediary performing quasi-
banking functions, neither a other non-bank financial intermediary. Neither can BSP
be considered as being engaged in the performance of similar banking and financing
activities.
Hence, the imposition of GRT on banks, non-bank financial intermediaries performing
quasi-banking functions, other non-bank financial intermediaries/financing
companies, and on persons performing similar banking or financing activities, as
prescribed under Sections 121 and 122, do not apply to the revenues realized by the
BSP.

Illustration 1:
ABC Bank has the following income/loss for the following months during the year
2021:
March April
Interest Income with Maturity of less than five
P150,000 P130,000
years
Rental receipts 40,000 55,000
Trading Gains 22,000 35,000
Trading Losses (32,000) (15,000)
How much is the GRT for each month?

Answer: March = P 10,300; April = P 11,050

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Solution:
 March
Interest Income P150,000  
GRT Rate 5% 7,500

Rentals P40,000  
GRT Rate 7% 2,800
TOTAL   P 10,300

 April
Interest Income P130,000  
GRT Rate 5% 6,500

Rentals P55,000  
GRT Rate 7% 3,850

Net Trading Gain-April

P 20,000
(P35k – P15k)
Less: Net trading Loss-March
(10,000)
(P22k – P32k)
Adjusted Net Trading Gain 10,000
GRT Rate 7% 700
TOTAL   P 11,050

Illustration 2:
Mr. A executed on November 10, 2013 a long-term loan from Bank B in the amount
of P5,000.000 payable within ten (10) years with the first installment due on or
before November 10, 2014 and the succeeding yearly installment on the same date of
the subsequent years. Assume that on November 10, 2018, the loan was pre-
terminated and that the interest paid, and other fees received from year 2014 up to
year 2018, amounting to P100,000 annually, were received and declared by Bank B
correctly and the applicable gross receipts taxes were paid as follows:
Remaining Maturity Amount of Gross receipt
Year Applicable tax rate
(years) interest, etc. tax
2014 9 P100,000 1% P1,000
2015 8 100,000 1% 1,000
2016 7 100,000 1% 1,000
2017 6 100,000 1% 1,000
2018 5 100,000 5% 5,000
    Total Gross Receipts Tax P9,000

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In 2018, upon pretermination, the loan agreement shall be reclassified and the
correct gross receipt tax, including prior years, shall be recomputed on the basis of
the new category as shown hereunder:
Remaining Maturity Amount of Gross receipt
Year Applicable tax rate
(years) interest, etc. tax
2014 4 P100,000 5% P5,000
2015 3 100,000 5% 5,000
2016 2 100,000 5% 5,000
2017 1 100,000 5% 5,000
2018 0 100,000 5% 5,000
    Total Adjusted Gross Receipts Tax P25,000
Less: GRT Previously paid (2014 to
(4,000)
2017)
Gross Receipts Tax Due as
P21,000
Recomputed

Sec. 122- Non-Bank Financial Intermediaries (GRT)

Gross receipts of other non-bank financial intermediaries (non-bank financial
intermediary not performing quasi-banking functions) doing business in the
Philippines shall be subject to GRT at rates and on items of income provided
hereunder:
(a) From interest, commissions, discounts, and all other items treated as gross
income — 5%
(b) On interests, commissions, and discounts from lending activities as well as
income from financial leasing, on the basis of remaining maturities of the
instruments from which such receipts are derived:
a. Maturity period is five (5) years or less — 5%
b. Maturity period is more than five (5) years — 1%
The same rules in Sec. 121 shall also apply, the only difference is the tax rate imposed
and who is subjected to the tax.
The above taxes may be paid by a investment house, investment company, financing
company, securities dealer/broker, lending investor, pawnshop, money broker, fund
manager, cooperative, insurance company, non-stock savings and loan association
and building and loan association.

Illustration:
XYZ Pawnshop realized the following gross receipts during the month:
Interest Income:
Short-term loans P 200,000
Long-term loans 180,000
Loan penalties for late payment (25% pertains to long-term 50,000
loans)

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Service Fees on loans (30% pertains to long-term loans) 60,000

Rental Income 80,000

How much is the GRT Due?

Answer: P 20,580

Solution:
Subject to 5% Subject to 1%
Interest Income P 200,000 P 180,000
Loan Penalties 50,000 -
Service Fees on Loans 42,000 18,000
Rental Income 80,000 -
Total 372,000 198,000
GRT Rate 5% 1%
GRT Due P 18,600 P 1,980

Sec. 123- Tax on Life Insurance Premiums

Every person, company or corporation doing life insurance business of any sort in the
Philippines, except purely cooperative companies or associations, is subject to the 2%
Premium Tax (PT) based on the total premiums collected.
Premiums on Health and Accident Insurance, whether received by a life or non-life
insurance company, are considered as premium on life insurance, and likewise
subject to the 2% PT, not VAT.
The "gross receipts" of non-life insurance companies is subject to the imposition of
VAT which includes the total premiums collected.
Reinsurance premiums are not subject to VAT, this being already subjected to VAT
upon receipt of the insurance premiums.
Re-issuance fees, reinstatement fees, renewal fees as well as penalties paid to the life
insurance company which are incidental to or in connection with the insurance

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policy contracts issued are considered akin to premiums, thus, such types of income
are covered by the two percent (2%) premium tax for the gross amount received on
such fees and/or penalties. Insurance and reinsurance commissions, whether life or
non-life, are subject to VAT
Management fees, rental income, or any other income earned by the life insurance
company from services which can be pursued independently of the insurance
business activity, are subject to VAT.

Investment Income
1. Investment Income from the Investment of Premiums Earned - Income
realized from investment activities utilizing the premiums earned by the life
insurance company from its policyholders is considered merely a part of
incidental to and is necessary to its main business of contracting insurance
services.
Thus, it is considered exempt from the further imposition of business tax since
the premiums, which have been the source of the funds invested had already
been subjected to the imposition of the 2% premium tax.

2. Investment Income Realized from the Investment of Funds Obtained from

Others - The income earned by the life insurance company whereby it uses the
funds solicited and pooled from its policyholders to invest in various marketable
securities, instruments, and other financial products, is considered as an
income earned from performing a quasi-banking function, thus, subject to the
gross receipts tax imposed under Section 121 of the Tax Code.
Summary:

  Life Non-life
1. Applicable / General Rate on
2% PT 12% VAT
Traditional Products
2. Business Tax on Premiums on Health
2% PT 2% PT
and Accident Insurance
3. Reinsurance Premiums exempt exempt
4. Reinsurance Commissions 12% VAT 12%VAT
5. Management Fees, Rental Income,
12% VAT 12% VAT
Other Charges, etc.
6. Other Income earned in connection to
2% PT 12% VAT
the insurance business
7. Investment Income from:
A. Invested Insurance Premium Exempt GRT
B. Other Sources GRT GRT

Illustration:
Tayan Insurance corporation, VAT-registered, is engaged in selling various insurance
products. During the quarter, they have the following data:

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Life Non-life
Premiums Received P 260,000 P 310,000
Reinsurance Premiums 70,000 120,000
Reinsurance Fees 21,000 24,000
Late payment penalty 10,000 13,000
Renewal fees 40,000 50,000
Insurance Commissions 50,000 45,000

Tayan also received P100,000 gross receipts from advertising income. How much is
the total business taxes to be paid?
Answer: P 77,660
Solution:
2% PT 12% VAT
Premiums Received P 260,000 P 310,000
Reinsurance Premiums (exempt) - -
Reinsurance Fees 21,000 24,000
Late payment penalty 10,000 13,000
Renewal fees 40,000 50,000
Insurance Commissions (P50k + P45k) - 95,000
Advertising Income - 100,000
Total 331,000 592,000
Tax Rate 2% 12%
Tax Due P 6,620 P 71,040

SEC. 124- TAX ON AGENTS OF FOREIGN INSURANCE COMPANIES

Fire, marine, or miscellaneous insurance agents authorized under the Insurance Code
to procure policies of life insurance on risks located in the Philippines for companies
not authorized to transact business in the PH are subject to a tax on 4%.
If property owners obtain insurance directly from abroad without the services of an
insurance agent, the tax shall be 5% of the premium paid.

Illustration:

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Ginko is buying insurances for his factory in Laguna. He availed the following:
Insurance Particulars Premiums Paid
Fire Insurance From a domestic insurance P 30,000
company
Flood Insurance Paid to an insurance agent of an 25,000
RFC
Earthquake Insurance Paid to an insurance agent of an 37,000
NRFC insurance company.
Other property Insurance Paid directly from an insurance 41,000
company abroad

How much is the total percentage tax due?

Answer: P 1,480 + P 2,050 = P 3,530
Solution:
4% OPT 5% 12% VAT
OPT
Fire Insurance From a domestic insurance P 30,000
company
Flood Paid to an insurance agent of an 25,000
Insurance RFC
Earthquake Paid to an insurance agent of an 37,000
Insurance NRFC insurance company.
Other property Paid directly from an insurance 41,000
Insurance company abroad
Total 37,000 41,000 55,000
Tax Rate 4% 5% 12%
Tax Due P 1,480 P 2,050 P 6,600

SEC. 125- AMUSEMENT TAXES

Covered Persons:
Gross receipts from the following activities are subjected to OPT

Amusement Activity OPT

Jai-alai & race tracts 30%
Cabarets, night or day clubs 18%
Cockpits 18%
Professional basketball game 15%
Boxing exhibition 10%

For purposes of amusement taxes, gross receipts shall include

1. All receipts of the proprietor, lessee, or operator of the amusement
place (i.e., rental income, sale of food and other articles); and
2. Income from television, radio, and motion picture rights, if any.

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Exemption: Boxing exhibitions in any division whether for World or Oriental

Championship is exempt from amusement tax if the following conditions are
met:
1. One of the contenders is a Philippine citizen; and
2. Promoter of the boxing exhibition is a Filipino citizen or a
corporation/association with at least 60% of its capital is owned by a
Filipino citizen.

CIR vs. Hard Rock Café (CTA EB No. 1960, Oct 01, 2019)

The case provided for the definition of the following amusement places:
 Night/Day Club - a place or establishment selling to the public food or
drinks, where the customers are allowed to dance (SC Case Junior Women’s
Club, 1956).

It is also defined by RR No. 14-16 as resorts frequented by pleasure seekers

at night where foods and wines and drinks are served, and music furnished,
and the patrons allowed to dance whether with their own partners or
professional hostesses furnished by such resorts.

 Cabaret - a place of amusement where customers go because of their desire

to dance and where the "bailarinas" are the main attraction. Dancing is the
main business and customers patronize the place attracted by the
"bailarinas". As a matter of fact, "bailarinas" are the indispensable factor in
the operation of the business (SC Case Sy Chiuco, 1960).

It is also defined by RR No. 14-16 to include cafes, restaurants, and all

similar establishments where patrons are entertained by performers who
dance and sing and/or where the patrons are allowed to dance with said
performers or entertainers who are ordinarily professional hostesses.

RR No. 14-67 reveals that the common characteristic of cabarets, night clubs and
day clubs is that they are considered places of amusement where pleasure seekers
are allowed to dance with their own partners or professional hostesses.

Otherwise stated, dancing (not dining) is the main business of cabarets, night
clubs and day clubs. Their customers frequent or patronize said establishments, not
primarily for dining purposes, but for dancing either with their own partners or with
professional hostesses employed, engaged, or furnished by the establishments
specifically for said purpose.

Illustration:
A cockpit complex, operated by Kyle Vergara, reported the following gross sales and
receipts during the quarter:

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Entrance/gate tickets P 50,000

Tongs on cockfighting rounds (sultada) 250,000
Sales of vitamins for fighting cocks 60,000
Rental income from stall concessioners 140,000
Sales by concessioners 300,000

How much is the OPT for the quarter?

Answer: P 90,000
Solution:
Entrance/gate tickets P 50,000
Tongs on cockfighting rounds (sultada) 250,000
Sales of vitamins for fighting cocks 60,000
Rental income from stall concessioners 140,000
Total 500,000
OPT rate of cockpit 18%
Total OPT Due P 90,000

SEC. 126- TAX ON WINNINGS

The following OPT rates shall be withheld by the proprietor, lessee, or operator of the
racetrack before paying the dividends or prizes to persons entitled to:

Particulars OPT Rate

Owners of winning racehorse 10%
Winnings in horse race or jai-alai, in general 10%
(straight wagers/non-combination bet)
Winnings from double, forecast/quinella, and 4%
trifecta bets
(combination bet)

The tax shall be paid within 20 days from the date it is withheld.
Illustration:
Kabayo Ko is an operator of a racetrack. It had the following dividends and prizes for
winning tickets during the event:
Total winnings on straight bets (cost of winning tickets is P 90,000
P15,000)
Total winnings in combination bets (cost of winning tickets is 120,000
P23,000)
Prize to winning horses 80,000

How much is the total percentage tax due?

Answer: P 19,380

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Solution:
10% OPT 4% OPT
Net winnings on straight bets (P90k – P15k) P 75,000 -
Net winnings on straight bets (P120k – - P 97,000
P23k)
Prize to winning horses 80,000 -
Total 155,000 97,000
OPT rate of cockpit 10% 4%
Total OPT Due P 15,500 P 3,880

SEC. 127- TAX ON SALE, BARTER OR EXCHANGE OF SHARES OF STOCK

LISTED AND TRADED THROUGH THE LOCAL STOCK EXCHANGE
Listed shares traded through the stock exchange shall be subject to a 0.6% final tax
based on the gross selling price or the gross value in money. The 0.6% stock
transaction tax is a final tax. The payment of such tax will exempt from income tax
any income derived from the sale of shares of stock.
The following are exempt from the stock transaction tax:
1. Dealers in securities;
2. Investor in shares of stock in a mutual fund company, in connection with the
gains realized by said investor upon redemption of said shares of stock in a
mutual fund company; and
3. All other persons, natural or juridical, who are exempt from taxes under
investment incentives and other special laws.
The stockbroker (seller/transferor), who effected the sale, shall pay, and remit the tax
to the BIR within 5 banking days from the date of collection.

Illustration 1:
A stockbroker effected the following sales of stock through the PSE:
Particulars Seller Price
Common shares Client P 300,000
Preferred shares Client 175,000
Stock options Client 210,000
Common shares Security Dealer 250,000

How much is the percentage tax?

Answer: P 4,110
Illustration:
Common shares P 300,000

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Preferred shares 175,000

Stock options 210,000
Total 685,000
Stock Transaction Tax Rate 0.6%
Stock Transaction Tax P 4,110
Due

Illustration 2:
Ms. Jenner is a client of CAL Financial, a stockbroker. As part of her investment plan,
she bought 500 shares of JFC trading at P60.35 each. CAL charges a commission fee
of 0.3% based on the total trading price. How much is the total business taxes on the
transaction?
Answer: P 191.91
Solution:
Stock Transaction Tax (P60.35 x 500 shares x P 181.05
0.6%)
VAT (P60.35 x 500 shares x 0.3% commission x 10.86
12%)
Total Business Taxes P 191.91

Tax Returns

BIR Form Who shall file Deadline

2551Q Generally, all taxpayers liable for 25 days after the end of each
OPT taxable quarter.
2552 Sale, barter, or exchange of 5 banking days from date of
shares of stock listed and traded collection
through the local stock exchange.
2553 Percentage Tax Payable Under On or before the due date for
Special Laws payments of tax as stated in the
(i.e., PAGCOR) Special Law

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