Business Tax - tax on the privilege to engage

in business

1.
1.

Value-Added Tax (VAT)

uniform tax imposed on every

sale, barter or exchange on goods,
properties and services
2.
Also levied on importation of
goods whether or not in the course of
trade or business
3.
Kind of percentage tax
(Nature):
1.
A privilege tax on the privilege
of selling or importing goods or
properties or rendering services for a
consideration
2.
Percentage Tax (either 0% or
12%)
3.
Indirect Tax and the amount
may be shifted or passed on to the
buyer so that it is the final purchaser or
consumer who bears the burden of the
tax
4.
Tax on consumption -applies
only to value added by the seller at
each stage
(Liable to the tax):
Tax is paid by the seller, transferor, person or
firm rendering the service, lessor or importer.
To be liable, the annual gross sales or
receipts must exceed P1,919,500 million and
transactions are not exempt from VAT
(Rate and base of the tax):
1.
On the Sale of Goods and
Properties - equivalent to 12% of the
gross selling price or gross value in
money of the goods or properties sold,
bartered or exchanged
2.
Importation of Goods equivalent to 12% based on the total
value used by Bureau of Customs and
VAT shall be based on the landed cost of
the goods plus excise tax, if any.
Landed Cost - invoice amount,
customs duties, freight insurance and
other charges. If subject to excise tax
then it shall form part of the tax base
1.
On sale of services and use or
lease of properties - equivalent to 12%
of gross receipts derived by any person
engaged in sale or exchange or services
for a fee or consideration including the
use or lease of properties, whether real
or personal
(Zero-Rated sales and exempt sales):

A.

The first are considered taxable

transactions for purposes of the VAT but
the seller is not liable to pay output tax;
but he is allowed to deduct his input tax
from other tax liability
B.
An exempt sale is not subject to
the VAT but the seller is not allowed tax
credit for input
Exempt from VAT are: - sale or importation of
agricultural and marine food products in
their original state, services rendered by
persons subject to other percentage taxes
A.
Medical, dental, hospital and
veterinary services
B.
Services performed by
employees or workers for an employer,
sales, and/or services performed by
persons (small business enterprises)
whose annual gross sales do not exceed
P1,919,500
(Computation):
A.
Input Tax credited against
output tax
a.
Input Tax - tax paid by a
person passed on to him by the
seller when he buys goods,
properties or services
b.
Output Tax - tax due to
the person when he sells goods,
properties or services
A VAT Payable - excess of the output tax
on sale of goods over the input tax on
importation
Gross Sales or Receipts x 12%
Less: purchase of
goods/properties/services x 12%
OUTPUT TAX - INPUT
= VAT
TAX
PAYABLE
1.
Credit or refund of excess input
tax - the excess shall be refunded or
credited against any internal revenue
taxes or refunded in part and credited
for the balance
If sales are 0% the taxpayer can

claim a refund of the input tax or credit

against other tax liabilities
(Lease of Property by a VAT-registered
taxpayer):
Residential Units - if monthly

rental is P12,800 or less then it is

=O
TAX

= IN

exempt from VAT regardless of the

aggregate annual gross receipts
a.
Lease is subject to VAT if
aggregate AGR from said rentals
exceed P1.5 million
b.
Subject to 3% percentage
tax if AGRs do not exceed
P1,919,500
Residential Units - apartments,
houses, lots used for residential
purposes and buildings or units used
solely for dwelling places except motels,
hotels, pension houses
Non-Residential or Commercial Units subject to VAT regardless of amount of
monthly rental per unit and AGR
Output tax is 12% less input VAT,
including input tax carried over from
previous quarters

(Filing of return and payment of tax):

1.
When:
a.
Quarterly VAT return of
the amount of gross sales shall be
filed within 25 days following the
close of each taxable quarter
prescribed for each taxpayer
b.
VAT-registered persons
shall pay the VAT on a monthly
basis
The return must be filed not later than
the 20th day following the end of each
month. Those filing with the Electronic
Filing and Payment System shall not be
later than the 25th day following the
end of each month
1 Where:
Unless otherwise permitted, the
quarterly return shall be filed with and
the tax paid to an authorized agent
bank, Revenue District Officer, Revenue
Collection Officer or duly authorized
treasurer of the city

1 Other Percentage Taxes

Measured by a certain
percentage of the gross selling price or
value in money of goods sold, bartered,
exchanged or imported or gross receipts
or earnings derived by any person
engaged in sales or business
Privilege taxes on the privilege

to sell commodities or services

(Basis):

Gross Receipts - all amounts received by the

prime or principal contractor undiminished
by any amount paid to any subcontractor
under subcontract arrangement
(Liable to Percentage Tax):
Tax on small business

enterprises - those exempt from VAT

because their annual gross receipts do
not exceed P1,919,500 and not VATregistered are liable
Tax is equivalent to 3% of gross
quarterly sales
Cooperatives are exempt from tax but
are required to register and pay annual
registration fee of P500
Tax on Domestic Carriers and

keepers of garage - cars for rent driven

by lessee, transportation contractors
including persons who transport
passengers and other domestic carriers
by land, and keepers of garage are
liable to 3% of their gross quarterly
receipts which shall not be less than
minimum provided in the Tax Code
Tax on International Carriers
international carriers, air or shipping,
doing business in the PHL are liable to
pay 3% of their gross quarterly receipts
Tax on Franchise Grantees
franchise holders whose annual gross
receipts of the preceding year do not
exceed P10,000,000 are liable to pay a
tax of 3%; and on utilities a tax of 2%
based on gross receipts derived from
business covered by the law
Overseas Communications Tax
persons paying for transmission of
overseas dispatches, messages or
conversations by telephone, telegraph,
tele writer exchange, wireless and other
communication equipment services are
liable to 10% of amount paid for such
services to be collected by person
rendering the service
Tax on Banks and Non-Bank

Financial Intermediaries Performing

Quasi-Banking Functions - based on
gross receipts as follows:
a.
On interest, commissions
and discounts from lending
activities on the basis of remaining
maturities of instruments from
which such receipts are derived:
Maturity is 5 years or less --- 5%
Maturity is more than 5 year --- 1%

On dividends and equity shares in

net income of subsidiaries --- 0%
On royalties, rentals of property,
real or personal, profits from
exchange and all other items
treated as gross income under Sec
32 of the Tax Code --- 7%
On net trading gains within the
taxable year on foreign currency,
debt securities, derivatives and
other similar financial instruments
--- 7%
Bank - either a commercial bank, rural
bank, thrift bank, development bank,
specialized government bank.
Financial Intermediary - entity
authorized by the Central Bank to
perform quasi-banking activities which
refer to borrowing funds from 20 or
more lenders at any one time
1.
Tax on other non-bank financial
intermediaries - 5% based on the gross
receipts derived by other non-bank
financial intermediaries doing business
in the Philippines from interest,
commissions, discounts and all other
items treated as gross income under
the Tax Code
Maturity is 5 years or less --- 5%
Maturity is more than 5 years --1%
1.
Tax on life insurance companies
and agents of foreign insurance
companies - tax is equivalent to 2% of
total premiums collected by such
companies
a.

Certain premiums
mentioned by law are not included
in taxable receipts
b.
Agents of non nonresident foreign insurance
companies shall pay at the same
time a tax equal to 10% of the total
premiums received, except
premiums paid upon reinsurance
when tax was been paid
c.
Owners of property
obtaining insurance directly with
foreign insurance companies shall
pay the tax of 5% on premiums
paid
Amusement Tax
a.
Proprietors, lessees or
operators of amusement places -

tax is equivalent to 18% of the

gross receipts for cockpits,
cabarets and night clubs;
10% for boxing exhibitions;
15% for professional basketball
games;
30% for jai-alai and race tracks
1 Winners in race horses or jai-alai tax is equivalent to 10% of the
winnings or "dividends" based on
actual amount given to winner;
winnings from double,
forecast/quinella and trifecta bets
shall be 4%;
for winners of race horses it shall
be 10% of prize
1 Sale, barter or exchange of shares of
stock
a.
Stocks listed and traded
through local stock exchange,
other than sale by a dealer in
securities, tax is 1/2 of 1% based
on gross selling price
b.
Shares of stock through
Initial Public Offering in closely held
corporations, tax based on gross
selling price, is imposed with the
proportion of shares of stock sold,
bartered, exchanged or disposed to
the total outstanding shares of
stock after listing in the local
exchange at rates:
Up to 25% --- 4%
Over 25% up to 33 1/3% --- 2%
Over 33 1/3% --- 1%
(Filing of Return and Payment of
Percentage Taxes):
1 When - must be made within 25 days
after the end of each taxable quarter
Percentage Tax is filed monthly, except
in the case of:
1 overseas communication tax and
amusement taxes where the return
shall be filed within 20 days after
the end of each quarter
2 Tax on winnings within 20 days
from date of tax was deducted and
withheld
3 Tax on sale of shares of stock listed
and traded in the local stock
exchange within 30 days from the
date of the listings of the shares of
the stocks
1 Where - where said business or principal
place of business is located

Persons Retiring from Business - within

20 days after closing their business

1 Excise taxes on certain goods

Tax imposed on certain

specified goods or articles
manufactured produced in the
Philippines for domestic sale or
consumption for any disposition and to
things imported into the Philippines
Fixed levies subjecting directly

certain produce or goods to tax

(Kinds):
Specific - imposed and based on

weight or volume capacity or any other

physical unit of measurement
Ad Valorem Tax - imposed and

based on selling price or other specified

value of the goods
(Subject to Excise Tax):
In General

a.
To goods manufactured or
produced in the Philippines for
domestic sale or consumption
b.
Things imported from
foreign countries
In Particular
a.
Alcohol products:
a.
distilled spirits - whiskey,
brandy, rum, gin, vodka; computed
either per proof liter (P4.48 or
P8.96) or based on net retail price
per bottle per 750ml (P84, P168,
P336 as increased by 12%)
b.
Wines - based on net
retail price per bottle of sparkling
wines and proof (P112 or P336) for
still wines (P13.44 or P26.88) per
liter of volume capacity
c.
fermented liquors - beer,
ale, and porter based on net retail
price per liter of volume capacity;
the tax is P6.89, P10.25, or P13.61
per liter
a.
Tobacco products include scraps, cuttings of tobacco;
cigars - P1.12 per cigar

Cigarettes - P0.40 if

packed by hand; depending on

price per pack, P1.12, P5.60, P8.96,
or P13.44 if by machine
Petroleum products
computed per liter

lubricating oil and

greases - P4.50

processed gas - P0.05

waxes and petroleum - P
denatured alcohol to be
used for motive power - P0.05
Naptha and regular

gasoline - P4.80
Naptha used as raw

material - P0
Leaded premium gasoline

- P5.35
Unleaded premium

gasoline - P4.35
kerosene,
diesel fuel oil - P1.63

liquefied petroleum gas - P0

aviation turbo fuel - P3.67

Used for motive power - P1.63

bunker fuel oil - P0.30

Asphalts - P0.56

Miscellaneous goods - in

the case of non-essential goods,

tax is 20% based on the wholesale
price or value of importation
automobiles
non-essential goods including
jewelry, whether real or imitations,
pearls,
precious and semi-precious stones
and imitations such as gold and
silver,
opera glasses,
lorgnettes,
perfumes and toilet waters,
and yachts and other vehicles
intended for pleasure or sports
a.
Mineral Products - coal and coke
per metric ton - P10
metallic and non-metallic

minerals and quarry resources and

locally extracted natural gas and
liquefied natural gas, and gold and
chromite - ad valorem tax is 2%
based on actual market value
Indigenous petroleum - ad

valorem is 3% based on
international market price
(Filing of return and payment of excise
taxes):
Persons Liable

Time for filing return and

payment of tax
Place for filing
Exceptions

In the case of imported articles