Ampongan - Other Percentage Taxes

Note: Generally, if the transaction or establishment is subject to Other Percentage Taxes, then it is exempt from value-added tax, and vice-versa.

Define Common Carrier?

Common carrier refers to persons, corporations, firms or associations engaged in the business of carrying or transporting passengers of goods, or both, by land, water or air, for compensation, offering their services to the public, and shall include transportation contractors.

Define

BANK OR BANKING INSTITUTIONS

Are persons and entities engaged in the lending of funds obtained from the public through the receipt of deposits or the sale of bonds, securities, or obligations of any kind, and all entities regularly conducting such operations.

Define

FINANCIAL INTERMEDIARY

Shall mean persons or entities whose principal functions include the lending, investing or placement of funds or evidences of indebtedness or equity deposited with them, acquired by them, or otherwise course through them, either for their own account or for the account of others.

Tax on banks and non-bank financial intermediaries

a. on interest, commissions and discounts from lending activities as well as income from financial leasing, on the basis of remaining maturities of instruments from which such receipts are derived:

maturity period:

5 years or less 5 -5%

More than 5 years - 1%

b. on dividends and equity shares and net income of subsidiaries - 0%

c. on royalties, rentals of property, real or personal, profits from exchange and all other items treated as gross income - 7%

d. on net trading gains within the taxable year on foreign currency, debt securities, derivatives, and other similar final instruments - 7%

Define

Quasi-banking activities

shall refer to the borrowing of funds from 20 or more personal corporate lenders at any one time, through the issuance, endorsement or acceptance of debt instruments of any kind other than deposits for the borrower’s own account, or through the issuance of certificates of assignment or similar instruments, with recourse, or of repurchase agreements for purposes of relending or purchasing receivables and other similar obligations.

Provided, however, that commercial, industrial and other non-financial companies, which borrows funds through any of these means for the limited purpose of financing their own needs or the needs of their agents or dealers, shall not be considered as performance quasi-banking functions.

Tax on life insurance premiums

What is the tax rate?

A tax of 2% of the total premium collected shall be collected from every person, company or corporation (except purely cooperative companies or associations) doing life insurance business of any sort in the Philippines.

Tax on life insurance premiums

When it isn’t taxable

The ff shall not be taxable:

1. premiums refunded within 6 months after payment on account of rejection of risk or returned for other reason to a person insured;

2. Reinsurance by a company that has already paid the tax;

3. upon doing business outside the PHL on account of any life insurance of the insured who is a nonresident, if any tax on such premium is imposed by the foreign country where the original insurance has been issued or perfected;

4. upon the portion of the premiums collected or received by the insurance companies on variable contracts, in excess of the amounts necessary to insure the lives of the variable contract workers.

Tax on agents of foreign insurance companies

A tax of 4% of the total premium collected shall be imposed upon every fire, marine or miscellaneous insurance agent authorized under the insurance code to procure policies of insurance as he may have previously been legally authorized to transact on risks located in the PHL for companies not authorized to transact on risk located in the PHL.

A tax of 5% on premiums paid shall also be imposed on owners of property who obtain insurance directly with foreign companies.

Amusement taxes

Q: To whom shall it be imposed?

A tax shall be imposed on the proprietor, lessee or operator of the ff amusement places:

Cockpits, cabarets, night or day clubs - 18%

Boxing exhibitions - 10%

Professional basketball games - 15%

Jai-alai and racetracks - 30%

A person or entity or association conducting any activity subject to amusement tax shall be similarly liable for said tax with respect to such portion of the receipts derived by him or it.

Note: When restaurant is owned or operated by a person other than the proprietor, lessee or operator of the amusement place, the receipts derived from the operation of the restaurant is subject to either value added tax or 3% percentage tax on persons exempt from VAT.

Boxing exhibitions wherein world or oriental championships in any division is at stake shall be exempt from amusement tax if

1. at least one of the contenders is a citizen of the PHL; and

2. said exhibitions are promoted by citizens of the PHL or by a corporation or association at least 60% of the capital of which is owned by such citizens.

Gaming tax on services rendered by offshore gaming licensees

What’s the tax rate?

gaming tax equivalent to 5% shall be levied, assessed and collected on whichever is higher between:

1. the entire gross gaming revenue or receipts; GGRR

2. the agreed predetermined minimum monthly revenue or receipts from gaming.

Gaming tax on services rendered by offshore gaming licensees

When to remit?

The gaming tax shall be directly remitted to the BIR not later than 20th day following the end of each month.

Tax on winnings

1. Winning in horse races - 10% of the winnings or dividends.

   → the tax us based on the actual amount paid to him for every winning ticket after deducting the cost of the ticket.

2. winnings from double, forecast, quinella and trifecta bets - 4% of the winnings

3. owners of winning race horses - 10% of the prizes

Tax on winnings

When to withhold?

The taxes are remitted within 20 days from the date these were deducted and withheld.

Define the ff:

Gross selling price

refers to the total amount of money or its equivalent which the purchaser pays the seller as consideration for the shares of stock.

Define the ff:

Gross value in money

Gross value in money means the fair market value.

In the case of shares traded thru the local stock exchange, the fair market value shall consists of the actual selling price at which the transaction was executed in the trading system and or facilities of the local stock exchange.

Define the ff:

Shares listed and traded through the local stock exchange

refers to all sales, trades or transactions [SaTT] of listed shares of stock executed through the trading system and/ or facilities of the local stock exchange.

This tax shall not apply to the ff:

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 shared of stock in a mutual fund company; and

3. All other persons, whether natural or juridical, who are specifically exempt from national internal revenue taxes under existing investment incentives and other special laws.

if the stocks are not traded through the local stock exchange, the tax shall be based on the net capital gain.

Instead of business tax, the tax shall be an income tax which shall be subject to a tax rate of 15% of the capital gain.

The stock holder who effected the sale shall collect the tax from the seller and remit the same

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Every person liable to pay percentage taxes shall file, either electronically or manually, a quarterly return of the amount of his gross sales or earnings and pay, either electronically or manually, with any authorized agent bank, Revenue District Office through Revenue Collection Officer or authorized software provider, the tax due thereon within 25 days after the end of each quarter.

What’s the BIR form?

BIR Form No. 2551Q

Who shall, required to file, the monthly BIR Form 2551Q?

1. persons whose gross annual sales do not exceed 3M and who are not vat-registered persons.

2. domestic carriers and keepers of garages, except owners of bancas and owners of animal-drawn two wheeled vehicle.

3. operators of international air and shipping carriers doing business in the PHL

4. Franchise grantees of gas or water utilities

5. franchise grantees of radio and or television broadcasting companies whose gross annual receipts of the preceding year do not exceed 10M and did not opt to register as VAT taxpayers

6. franchise grantees sending overseas dispatch, messages or conversations originating from the PHL

7. proprietors, lessees or operators of cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball games, jai-alai and racetracks.

8. banks, non-bank financial intermediaries and finance companies

9. life insurance companies

10. agents of foreign insurance companies.

The quarterly filing and payment does not apply in the ff instances:

1. Tax on winning - the tax shall be remitted to the Bureau of Internal Revenue within 20 days from the date the tax was deducted and withheld— BIR Form 1600WP

2. Stock Transactions Tax - within 5 banking days from the date of collection thereof — BIR Form 2552

Person retiring from business

any person retiring from business subject to percentage tax shall notify the nearest internal revenue officer, file, either electronically or manually, the person’s return and pay, either electronically or manually, the tax due thereon within 20 days after closing the business.

Question: How much is tax rate of domestic air carrier on their services performed within the Philippines?

Answer: domestic air carriers are subject to 12% VAT on their services performed within the Philippines.

However, if their international transport operations involve both services performed within the Philippines and services performed without, the income from services involving the transport of passengers, goods and cargoes from the Philippines to a foreign country are derived from within the subject to zero-rate 0%.

Note:

International air and shipping carriers doing business in the Philippines on their gross sales derived from transport of cargo from the Philippines to another country shall pay a tax equivalent to 3% of their quarterly gross sales.

Define International Air Carrier

shall refer to a foreign airline corporation doing business in the Philippines having been granted landing rights in any Philippine port to perform international air transportation services/ activities or flight operations from the Philippines to anywhere in the world.

Define Off-line carrier

shall refer to an international air carrier having no flight operations to and from the Philippines.

Define on-line carrier

shall refer to an international air carrier having or maintaining flight operations to and from the Philippines.

This tax is imposed together with the income tax on international carriers of 2.5% of gross Philippine billings

The business tax imposable on international carriers is summarized below:

Route Passenger Good or cargo

Abroad to PHL Not Taxable Not taxable

PHL to abroad Not Taxable *3%

Define Franchise?

is a special privilege or right conferred on an individual or corporation by the State through the lawmaking body, to operate a public utility.

Franchise holders other than those enumerated above shall be subject to value-added tax.

if they are subject to VAT, they are no longer subject to franchise tax.

*Franchisees other than radio and or television broadcasting companies are subject to VAT if the annual gross sales exceed P3,000,000, except franchisees of gas and water utilities bc they are subject to franchise tax.

REAL PROPERTY TAXATION