TAXATION ATTY. AL S.

MACMOD, CPA
OPT

Summary Rules on other Percentage Taxes Under R.A 8424 as amended by TRAIN Law 2018

Section Tax Base Tax rate

116 Tax on Persons exempt from VAT Gross quarterly
Sales or receipts 3%
117 Percentage tax on domestic
Carriers and keepers of garages; common
Carriers by land Quarterly gross
Receipts 3%

The following shall be considered per unit minimum quarterly gross receipts (for Sec. 117 only)

QUARTERLY
a. Jeepney for hire: Manila and other cities P 2,400
Provincial 1,200
b. Public Utility bus: Not exceeding 30 passengers 3,600
Exceeding 30 but not exceeding 50 6,000
Exceeding 50 passengers 7,200
c. Tax Cab: Manila and other cities 3,600
Provincial 2,400
d. Car for hire: With chauffeur 3,000
Without chauffeur 1,800

118 OPT on international Carriers (Air & Shipping) Gross quarterly Receipts 3%

119 Tax on Franchises:

-On gas & water utilities Gross receipts 2%
-On radio/telephone, broadcasting corp. Gross receipts 3% or pay
VAT at their option

120 Tax overseas dispatch messages Gross quarterly

or conversation originating from receipts from
the Philippines such services 10%

*Exempted from Sec. 120 are:

1. Government
2. Diplomatic services
3. International organizations
4. News services

121 Tax on Banks and non-bank gross receipts 5% / 1%

financial intermediaries from Phil.

On interest commissions and discounts from lending activities as well as income from
financial leasing based on remaining maturities of the instrument:
a. Not in excess of 5 years 5%
b. In excess of 5 years 1%
c. On dividends and
d. 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%
122 Tax on finance companies
-from lending Gross receipts – 5%/ 1%
-from other sources Gross income- 5%

123 Tax on life insurance premium Insurance premiums collected 2%

124 a) Agents of foreign insurance Insurance premiums collected 10%

companies (fire/marine or
miscellaneous insurance agent
b) Owners of property who obtain
Insurance directly with foreign
companies On premiums paid 5%
125 Amusement taxes:
Cockpits Gross receipts 18%
Cabarets, night/day clubs Gross receipts 18%
Boxing Exhibitions Gross receipts 10%
 (Exempt if a world or oriental championship in any division is at stake, promoted by a
Filipino citizen or Corporation is 60% Filipino owned, and one of the contenders is a Filipino
citizen)
Professional Basketball games Gross receipts 15%
Jai-alai & Race tracks Gross receipts 30%

*For the purpose of the amusement tax, the term “gross receipts” embraces all the
receipts of the proprietor, lessee or operator of the amusement place. Said gross receipts
also include income from television, radio, and motion picture rights, if any.

126 Tax on winnings a. Owner of winning race 10% of the prize

horses
b. Winner of the prizes in
double forecast/quinella &
trifecta bets 4% of the prize
c. Person winning not in
double forecast/quinella & 10% of the net
trifecta bet receipts

127-A Tax on sale, barter or exchange of shares of stock listed and traded through the local stock
exchange-other than sale by a dealer in securities 6/10 of 1% of gross selling price or
gross value in money of the shares of stock sold, bartered, exchanged or otherwise
disposed.

127-B Tax on shares of stock sold or exchanged through initial public offering:

Proportion of shares of stock sold, bartered or exchanged or disposed of the outstanding

shares of stock after the listing in the LSE.

Up to 25% 4% of GSP
Over 25% to 33 1/3% 2% of GSP
Over 33 1/3% 1% of GSP
Exercises:

A. FOX Co. Engaged in stockbrokerage and dealership in
securities provided the following data for the 2 nd Quarter
of CY:
Commission received (NET) P 150, 000
Commission uncollected but earned 250, 000
Stock transactions are: (VAT excluded)
Price Cost
A Stock P 500, 000 P 350, 000
B Stock 600, 000 500, 000
C Stock 800, 000 650, 000
Supplies bought P112, 000 VAT included.
A. The percentage of Fox Co, is P______________
B. The VAT of Fox Co. is P _____________
C. From the following data compute the tax due:
___________ 1. Sale of food & refreshment by Manila Hotel
total invoice amount P 4, 480, 000.
___________ 2. Sale of food & refreshment by an operator in
a cockpit P300, 000.
___________ 3. Receipts of PEGASUS night club for 3 months
P 4,500, 000.
___________ 4. Total cash collections of PBA for the 3 rd Q of
CY P 30, 000,000.
____________5. Sales of shares of stock though LSE 20, 000
shares sold at P100/share: cost P75/share.
___________ 6. Dividends won in a horse race by DOLPHY
P50,000 as owner, cost of winning ticket
1,000.
___________ 7. What if the above winning is won from a
double bet.
___________ 8. Total receipts of an establishment from
Boxing Exhibition P2, 000, 000.
___________ 9. What if the above receipts were from a world
championship match between ERAP and
CHAVIT both Filipinos in the Phil. promoted
by GLORIA, a Filipino Citizen.
__________ 10. Total life Insurance Premiums collected by
Philamlife for the 2nd Q of 2007 P20,000,000.
___________11 Interest income by BPI from medium-term
loans P4,000,000.
__________ 12 If the above income is from a loan extending
over seven years.
___________13 Shares of stock 10,000/ sold shares at
P500/share; cost P300/share; not thru LSE
___________14 If the above sales were made thru LSE
___________15 If the above sales were made by a stock
broker involving ordinary assets.
B. In the following ten questions, write
a- if only the first statement is correct
b- if only the second statement is correct
c- if both statements are correct
d- if both statements are incorrect
1. 1st Statement –A VAT registered person is subject to VAT
regardless of his annual gross sales or receipts.
2nd Statement - A person whose annual gross sales or
receiptsdoes not exceed P100, 000 is not subject to VAT
but subject to OPT.
2. 1st Statement – Movie house operators are also subject to
amusement tax.
2nd Statement - The 10% overseas communication tax is
paid to the person rendering the service.
3. 1st Statement – Generally OPT Taxes are paid within 20
days after the end of each quarter.
2nd Statement - In bank tax, the basis of the OPT is the
bank’s receipts less interest expenses.
4. 1st Statement – The tax Code imposes only one kind of
amusement tax- The Amusement tax on gross receipts.
2nd Statement - Common carrier’s tax does not include
transportation contractors.
5. 1st Statement – Amusement tax on winnings is based on
the winnings before deducting the cost of the ticket.
2nd Statement - The OPT on the winnings is deducted
from the dividends or prize and remitted to BIR within 25
days from the date it was withheld.
6. 1st Statement – The ½ of 1% OPT on shares of stocks are
imposed on both the transferor and transferee.
2nd Statement - The above tax shall be remitted within 10
banking days from the date of collection by the seller.
7. 1st Statement – The OPT in shares of stocks in closely
held corporations is imposed on the issuing corporation
only.
 2nd Statement - A closely held corporation is any 18. Assuming the taxpayer is VAT-registered, the VAT
corporation wherein more than 50% of the OCS is owned payable is:
directly or indirectly by not more than 20 persons. a. P 2,250 c. P 7,800
8. 1st Statement – All initial public offerings of stocks are b. P 3,000 d. P 6,500
subject to IPO Tax.
2nd Statement - The above tax paid (on the initial 19. One of the following is not subject to the 3% percentage
offering) is deductible expense for income tax purposes. tax.
9. 1st Statement – OPT like VAT is an excise tax, hence also a. International air carrier doing business in the Phils.
a privilege tax. b. International shipping carrier doing business in the
2nd Statement - A person may be subject to VAT and OPT Phils.
on the same transaction. c. Domestic carriers and keepers or garage.
10. 1st Statement – A person may be subject to VAT and d. Franchise grantee of city gas and water supplies.
excise tax on the same transaction.
2nd Statement - A person may be subject to OPT and 20. Franchise grantees of city gas and water utilities is
income tax on the same transaction. subject to a franchise tax of:
a. 2% c. 4%
11. Which of the following statements is incorrect? b. 3% d. 5%
a. A taxpayer whose annual gross receipts/sales exceed
P1.9M shall pay VAT even if he is not VAT-registered. 21. Amounts received for overseas dispatch, message, or
b. A taxpayer whose annual gross receipts/sales do not conversation originating from the Philippines are subject
exceed P1.9M but who is VAT-registered shall pay to:
VAT. a. 3% franchise tax.
c. Percentage tax may be imposed together with VAT. b. 10% overseas communication tax.
d. Percentage tax may be imposed together with excise c. 2% franchise tax.
tax. d. 10% value-added tax.

12. *Just like value-added tax, percentage taxes are paid on
a quarterly noncumulative basis.
*Generally, every person liable to pay the percentage
taxes shall file a quarterly return within 25 days after the
end of each taxable quarter.
a. True, True c. False, True
b. False, False d. True, False
13. Which of the following statements is correct?
a. Cooperatives shall be exempt from the 3% gross
receipts tax.
b. A VAT-exempt taxpayer who issues VAT invoice shall
not be liable to VAT.
c. Every person liable to the percentage tax shall always
file a separate return for each branch or place of
business.
d. Motorized tricycle are not subject to percentage tax.
14. One of the following is subject to common carrier’s tax.
a. Owners of bancas
b. Owners of animal-drawn two-wheeled vehicles
c. Common carriers by land, air or water for transport of
goods or cargoes.
d. Common carriers by land, for transport of
passengers.
15. A person whose business is to keep automobiles for hire
or keep them stored for use or order.
a. Keepers of garage c. Taxicab operators
b. Common carrier d. Tourist bus operator
22. A tax on the right or privilege to enter places of
amusement.
a. Value-added tax c. Amusement tax
b. Franchise tax d. Income tax
23. One of the following is not subject to amusement tax on
gross receipts.
a. Disco houses c. Professional basketball
b. Cockpits d. Bowling alleys
24. All of the following except one are liable to 6/10 of 1%
stock transaction tax. Which one is not?
a. Individual taxpayers, whether citizens or alien
b. Corporate taxpayers, whether domestic or foreign
c. Estate and trust
d. Dealers in securities
25. One of the following statements is incorrect.
a. The 6/10 of 1% tax shall be collected by the brokers
who made the sale and shall be remitted within 5
banking days from the date of collection.
b. The tax paid on sale of shares through local stock
exchange and initial public offering (IPO) and
secondary offering shall not be allowable deduction
for income tax purposes.
c. The 6/10 of 1% stock transaction tax is a final
withholding income tax.
d. The 6/10 of 1% tax stock transaction is collected
whether there is an income or a loss and is a
percentage tax.

16. The franchise tax of grantees of radio and television 26. Grandbaby is a common carrier by land. During a
broadcasting whose annual gross receipts of the particular quarter, its receipts consist of the following:
preceding year do not exceed P10, 000, 000 shall be: Transport of passengers P 1,000,000
a. 2% of the gross receipts Transport of goods 1,500,000
b. 3% of the gross receipts Transport of cargoes 500,000
c. 4% of the gross receipts The common carriers tax payable is;
d. 5% of the gross receipts a. P 30,000 c. P 100,000
b. P 90,000 d. None
17 & 18 are based on the following
In the third quarter of CY, a taxpayer engaged in the sale of 27. Using the data in no. 26, the output VAT is: (Figure w/out
services whose annual gross receipts do not exceed P 3M has VAT)
the following data: a. None c. P 100,000
Accounts receivable, beginning of quarter P 50,000 b. P360,000 d. P 240,000
Sales during the quarter, on account 100,000
Accounts receivable, end of quarter 75,000
Purchase of supplies, total invoice amount 11,200
28. Using the data in no. 26, the TAX due is, (assuming
taxpayer is common carrier by sea)
17. The percentage tax due for the quarter is: a. None c. P 100,000
a. P 2,250 c. P 7,500 b. P360,000 d. P 240,000
b. P 3,000 d. P 6,500
29. Mr. J. Cruz is the owner of a small variety store. His gross a. None c. P 300,000
sales in any one year did not exceed P3M. He is not VAT- b. P 500,000 d. P 900,000
registered. The following data are taken from the books
of the variety store for the quarter ending March 31 of 35. Assuming the above is not a world championship but a
CY. Philippine national boxing championship, how much is the
Merchandise inventory, Jan. 1, CY P 100,000 amusement tax?
Gross sales 450,000 a. None c. P 300,000
Purchase from VAT-registered b. P 500,000 d. P 900,000
suppliers 350,000
Interest Income, BPI 50,000 36. KAPUSO is a radio-tv broadcasting franchise grantee.
The percentage tax due is: During the preceding year, its gross receipts did not
a. P 54,000 c. P 16,500 exceed P10,000,000. During the first quarter of the
b. P 13,500 d. P 15,000 current year, it has the following data:

29.B. The Income Tax Due if he opted for the 8% rule under Gross receipts, sale of airtime P 2,000,000
TRAIN is: Gross receipts, use of radio 500,000
a. P 36,000 c. P 4,400 station’s communication facilities
b. P 7,600 d. P 800 Business expenses 700,000
The franchise tax due for the quarter is:
30. KWING WATER COMPANY (KWC) is a holder of franchise a. P 60,000 c. P 75,000
to sell water services. In a particular quarter, its gross b. P 40,000 d. P 39,000
receipts amounted to P 2,000,000. It has also receipts
from the lease of its auditorium and theatre amounting to 37. APOL GANGNAM a horseracing enthusiast and owner of
P600, 000. winning horse has the following winnings during a
The percentage tax due for the quarter is: particular race day:
a. P 40,000 c. P 100,000 Total winnings P 10,000
b. P 60,000 d. P 92,000 Cost of winning tickets 500
Price received as owner of winning
31. Emong operates a cockpit. Inside the cockpit, he also horse 50,000
operates a restaurant. Data for the particular
quarter follow: The tax on winning is:
Gross receipts a. P 1,000 c. P 950
Cockpit operation P 500,000 b. P 400 d. P5,950
Restaurant operation
Sale of food 100,000 38. LAILAH invested P500,000 in the shares of stock of Manila
Sale of liquor 150,000 Trading Corp. Later she sold the said shares for only
The amusement tax due is: P350,000. The corporation’s shares are listed and are
a. P 90,000 c. P 225,000 traded in the local stock exchange. The percentage tax on
b. P 135,000 d. P 75,000 the sale is:
a. None c. P1,750
32. Using data in no. 31, except that the restaurant is not b. P2,500 d. P2,100
owned by Emong but is owned by another person.
Chikababes, not VAT-registered and whose annual gross 39. Using the same data in no.38 and assuming that LAILAH
sale never exceeded P3 M. The amusement tax due is: sold the shares to NASH, a direct buyer, the capital gain’s
a. P 90,000 c. P 225,000 tax due is:
b. P 135,000 d. P 75,000 a. None, because it is subject to percentage tax
b. P2,500
33. Continuing to no. 32, the percentage due from c. P1,750
Chikababes is: d. None, because there is no net capital gains.
a. P 90,000 c. P 225,000
b. P 135,000 d. P 7,500 40. MR. DIAMOND, a dealer in securities, sold P1,500,000
worth of shares she held as investment. The
34. J. Santos promoted a world boxing championship in shares sold were acquired for P 1,000,000 and were listed
Manila featuring Manny Yapak, a Filipino champion. Gate and traded in the local stock exchange.
receipts amounted to P 3, 000, 000 and additional The percentage tax due on the sale is:
receipts from television coverage was P 2, 000, 000. The a. None c. P 2,500
amusement tax due is: b. P 7,500 d. P 5,000

“ Act as if it were impossible to fail.”

- Dorothea Brande