CHAPTER 15.

OTHER PERCENTAGE TAXES

OTHER PERCENTAGE TAXES (OPT)
 Also called as Non-VAT
 Rates (0%-30%)
 Marginalized Income Earners (MIE), taxpayers who is
not an employee and not a licensed professional and
have businesses with <P100K annual gross sales or
receipts, are exempt from VAT and OPT.
Sale of Goods or Services
 <P1,919,500 gross sales/receipt → Subject to 3% OPT
 Sale to Government is subject to withholding taxes:
1. Withholding percentage tax of 3% (if seller is non-
VAT)
2. Creditable withholding income taxes (CWIT)
a. 1% on purchases of goods
b. 2% on purchases of services

Domestic Carriers and Keepers of Garages

 Cars for rent or for hire, transportation contractors, and
other domestic carriers by land for the transport of
passengers and keepers of garages → Subject to 3% OPT
based on gross receipts on transport not to be lower
than the minimum quarterly/monthly;
 gross receipts as provided by Sec 117 of RA 8424
 Transport of cargoes (land) – generally at 12% VAT
 Domestic air & water carriers (Goods/ cargoes) –
generally 12% VAT

Fundamental Principles International Air and Shipping Carriers

1. Imposition of OPT – imposed on non-VAT registered 1. IC with foreign registry – prohibited to engage in
taxpayers whose business transactions are below VAT domestic transport (passengers/cargoes); taxable only
threshold on GR derived on Philippine origin of transport
a. Within threshold a. Transport of passengers – VAT exempt
(1) sale of goods & services - <P1,919,500 b. Transport of cargoes – 3% OPT
(2) radio/TV franchise grantees - <P10M 2. IC with Philippine registry – engaged in both domestic
b. Industries covered by specific OPT and international air/shipping of passengers and
(1) Domestic carriers and keepers of garages cargoes
(2) International air and shipping carriers a. Domestic transport – 12% VAT on domestic GR
(3) Franchises b. International transport – 0% VAT on foreign GR
(4) Overseas dispatch or message from the
Philippines
(5) Bank and non-bank financial intermediaries
(6) Finance companies
(7) Life insurance companies
(8) Agents of foreign insurance companies
(9) Amusement taxes
(10)Tax on winnings
(11)Sale of shares of stock in local stock exchange;
or through IPO
2. Treatment of VAT of non-VAT taxpayer.
a. Buyer’s Point of View - OPT (non-VAT supplier) and
Input VAT (Vat supplier) treated as part of Cost of
Goods Franchises
b. Seller’s Point of View – not allowed to collect Output  Privilege acquired by special grants from the public
VAT; OPT is treated as deductible operating through the legislature which imposes on the grantee as
expense a consideration, a duty to the public to see that they are
3. No creditable Input Vat allowed properly used
4. Returns and Payment of OPT – filed quarterly within 25
days after end of quarter; using BIR Form 2551Q
5. Filing and Payment of GRT- paid w/in 20 days following
end of month; using BIR Form 2551M
 CHAPTER 15. OTHER PERCENTAGE TAXES
applicable taxable year less the figures already reflected
in the previous months of the same taxable year.
 The net trading loss may only be deducted from net
trading gain (from same item/s) but not from any other
items of gross receipts to arrive at the total monthly
gross receipts tax due.
 The net trading loss can be carried over (deducted) only
for the YEAR it was incurred.
*Financial leasing income – interest, commissions, and
discounts from lending activities, and financial leasing
*Other income – royalties, rentals of real or personal
Overseas Dispatch, Message or Conversation property
 Overseas dispatches, messages, or conversations
originating from the Philippines by telephone, GRT on Non-Banks financial Intermediaries
telegraph, telewriter, exchange, and other  Non-Bank FI not performing quasi-banking functions
communication equipment services is subject to OPT.
The 10% OPT is the expense of caller withheld by the
service provider paid 20 days after eoq.

 Financial leasing income from interest (recovery of

principal not included), commissions, discounts;
 Other income – royalties, and rentals of real prop. To
pertain to gross amount

Life insurance companies

 Non-Bank FI not performing quasi-banking functions
Gross Receipts Tax (GRT) on Banks and Quasi-Banks
 Privilege acquired by special grants from the public
through the legislature which imposes on the grantee as
a consideration, a duty to the public to see that they are
properly used

*Unrelated service income oncludes management fees,

rental income, etc.

Agents of Foreign Insurance Companies

 If insurance is acquired from foreign companies not
 In computing for the net trading gains on foreign authorized to transact business in the Philippines:
currency, debt securities, derivatives, & other financial a. Through an agent – 4% of premium collected;
instruments, the figure to be reported in monthly agents to pay for the tax.
percentage tax return shall be the cumulative total of b. Purchased directly – 2% on premium paid; paid by
the net trading gain/loss since the first month of the property owner to BIR
 CHAPTER 15. OTHER PERCENTAGE TAXES
3. Secondary offering – offer for sale to the investing
Amusement Taxes public by existing shareholders conducted during
 From GR of proprietor/lessee/operator IPO
 GR includes: 4. Follow-on/Follow-through Offering – offering of
1. All receipts of proprietor, lessee, or operator of the shares to investing public subsequent to an IPO
amusement place
2. Including income from tv, radio, and motion picture Sale of Shares of Stock through Local Stock Exchange
rights.  .05% OPT of gross selling price or gross value
 Subject to Quarterly OPT with rates as follows:  Already a final tax and exempt from income tax derived
1. Jai-alai and race tracts – 30% from such sale of stock
2. Cabarets, night clubs or day clubs – 18%  Paid by stockbroker within 5 banking days from date of
3. Cockpits – 18% collection
4. Professional basketball games – 15%
5. Boxing exhibitions – 10% Pawnshops - Subject to 5% OPT
 Exceptions:
a. Filipino citizen contender for SUMMARY
World/Oriental Championship
b. Filipino citizen promoter; if corporation
(60% Filipino owned)

Horse Race Winnings

 Owners of winning horses – 10% OPT
 Wagerer/Bettors
a. 10% tax on winnings/dividends from horse races
b. 4% tax on winnings from:
(1) “Double” – winning number for 2 consecutive
races
(2) “Forcastiquinella” – winning numbers for 1st and
2nd in a race
(3) “Trifecta” – winning numbers for 1st, 2nd, and 3rd
in a race
 Tax is paid within 20 days from date deducted
and withheld by person in charge of the horse
races

GRT on Non-Banks financial Intermediaries

 % of IPO to Outstanding Shares Tax Rate
<25% 4%
25 to 33 1/3% 2%
>33 1/3% 1%
 Tax basis is the higher of amount of gross selling price or
gross value in money of shares of stock sold, bartered,
or exchanged.
 Tax paid by:
1. Primary offering - issuing corporation w/in 30 days
2. Secondary offering – by seller w/in 5 days from date
of collection
 Definition of Terms:
1. IPO – public offering of shares of stock for the 1st
time in local stock exchange
2. Primary offering – original sale made to the
investing public by issuer corporation of its unissued
shares of stock