PERCENTAGE TAX Flashcards by tin’s visual diary

Domestic Common Carriers Tax

A tax equivalent to 3% of quarterly gross sales (common carrier’s tax) shall be imposed on income derived by a taxpayer from:
> Car for rent
> Car for hire driven by lessee
> Transporation contracts (including buses for hire)
> Domestic carriers by land for transport of passengers
> Keepers of garages

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Common carrier’s tax shall not apply to:

> owners of bancas
animal drawn two-wheeled vehicles

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Domestic transport by land
• Passenger

3% ССТ

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Domestic transport by land
• Cargoes

VAT 12%

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Domestic transport by sea or air
• Passenger
• Cargoes

VAT
VAT

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International transport by sea or air (outbound)

• Passenger
• Cargoes

ZERO- RATED
ZERO- RATED

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International transport by sea or air (inbound)

• Passenger
• Cargoes

Exempt
Exempt

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International Common Carriers Tax

A tax equivalent to 3% of quarterly gross sales (common carrier’s tax) shall be imposed on international transport of cargoes originating from the Philippines by international carriers.

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International Common Carriers Tax

International carriers are resident foreign corporations doing business in the Philippines that is engage in air or sea tranport services.

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Summary of taxation on international carriers:

International transport by sea or air (outbound)

Passenger
Cargoes

Passenger: Exempt
Cargoes : Exempt

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Summary of taxation on international carriers:

International transport by sea or air (inbound)

Passenger: Exempt
Cargoes: 3% CCT

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FRANCHISE TAX

• A tax equivalent to 2% of quarterly gross sales (franchise tax) shall be imposed on income earned by franchise grantees gas and water utilities.

• Other franchise grantees shall follow the rule on VAT registration.

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Summary of taxation on franchise grantees:

• Gas and water franchise holders: x

• Radio and television franchise holder:

• Other franchise holders (electricity, etc.)

• Gas and water franchise holders: 2% franchise tax

• Radio and television franchise holder:
Sales not exceeding P10 million: 3% PT
Sales exceeding P10 million: 12% VAT

• Other franchise holders (electricity, etc.)
Sales not exceeding P3 million: 3% PT
Sales exceeding P3 million: 12% VAT

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OVERSEAS COMMUNICATIONS TAX

• A tax of 10% of quarterly gross sales (overseas communications tax) shall be imposed on income earned by a person on overseas dispatch of message or conversation originating from the Philippines.

• Domestic degutch A message originatel frothe lie onginall trom
foreign countries shall by zero-rated or VAT-exempt.

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OVERSEAS COMMUNICATIONS TAX

Overseas communications rendered to the following shall be exempt from by OCT:

• Government
> Diplomatic services
> International organizations
• News services

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TAX ON FINANCIAL INTERMEDIARIES

• Banks
> Entities engaged in the lending of funds obtained in the forms of deposits.

• Non-bank financial intermediaries
• entities whose principal function include the lending, investing or placement of funds.
> For business tax purposes, non-bank financial intermediaries shall be differentiated depending on whether or not it performs quasi banking functions.
> Quasi-banking function refers to the borrowing of funds from 20 or more personal or corporate lender at any one time.

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Tax on Financial Institutions

Type of Income Source:

Income on lending activities and finance leases, where the instrument has remaining maturity of LESS THAN 5 YEARS

A. Doing Banking/ Quasi Banking Operations
B. Not Doing Banking/ Quasi Banking Operations

A. Doing Banking/ Quasi Banking Operations: 5%
B. Not Doing Banking/ Quasi Banking Operations:5%

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Tax on Financial Institutions

Type of Income Source:

Income on lending activities and finance leases, where the instrument has remaining maturity of MORE THAN 5 YEARS

A. Doing Banking/ Quasi Banking Operations
B. Not Doing Banking/ Quasi Banking Operations

A. Doing Banking/ Quasi Banking Operations: 1%
B. Not Doing Banking/ Quasi Banking Operations:1%

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Tax on Financial Institutions

Type of Income Source: Net trading gain within the taxable year

A. Doing Banking/ Quasi Banking Operations
B. Not Doing Banking/ Quasi Banking Operations

A. Doing Banking/ Quasi Banking Operations: 7%
B. Not Doing Banking/ Quasi Banking Operations: None per tax code

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Tax on Financial Institutions

Type of Income Source: Other income sources

A. Doing Banking/ Quasi Banking Operations
B. Not Doing Banking/ Quasi Banking Operations

A. Doing Banking/ Quasi Banking Operations: 7% (except dividend - 0%)
B. Not Doing Banking/ Quasi Banking Operations: 5%

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Interest on loand earned by non-financial institutions shall be subject to ____

regular VAT rules.

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Net Trading Gains of Banks

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• applies to the annual net gains.
• The figure to be reported in the monthly percetage tax return shall be the cumulative total of the net trading gain/loss since the start of the taxable year, less the figure already reflected in the previous months.

Net Trading Gains of Banks
T or F?
1. Net trading losses shall be deductible to the extent of gains from trading losses on the same category.
2. Net trading losses shall not be deductible from othre categories of receipts.

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Net Trading Gains of Banks T or F? If the bank reported a cumulative net trading loss at the end of the year, such cannot be carried over as deduction in trading gains in the following year.

Tax on Insurance • Resident Life Insurance Companies

• 2% (insurance company doing business in the PH)

Tax on Insurance Foreign Insurance Companies

• 4% (twice the tax on insurance companies doing business in the PH) • 5% (Owner of properties obtaining insurance from foreign companies) Ex. Let’s say Juan dela Cruz, a Filipino businessman, owns a resort in Palawan. He chooses to insure the resort with Overseas Pacific Insurance Ltd., a foreign insurer not authorized to do business in the Philippines. Premium Paid: PHP 2,000,000 PHP 2,000,000 × 5% = PHP 100,000 Juan is required to file and pay this PHP 100,000 directly to the Bureau of Internal Revenue (BIR), since he engaged a non-authorized foreign insurer.

Tax on Insurance Premium on resident non-life insurance insurance companies are subject to ______

VAT

Tax on Insurance Exclusions from life insurance premium subject to percentage tax:

> Premiums refunded 6 months after payment on account of rejection of risk. > Reinsurance premium where tax was previously paid. › Premiums collected on account of the life insurance of a non-resident insured Premiums collected on account of reinsurance > Premiums collected on variable contracts in excess of the amounts necessary.

Amusement Tax Entertainment Place: Jai alai and racetrack

Tax on Gross Sales: 30%

Amusement Tax Entertainment Place: Cockpits, cabarets, hight and day clubs

Tax on Gross Sales: 18%

Amusement Tax Entertainment Place: Professional baskeball games

Tax on Gross Sales: 15%

Amusement Tax Entertainment Place: Boxing exhibition

10%

Amusement Tax Exemption on professional boxing (must meet all conditions):

>World or Oriental Championship » At least one of the contenders is a Filipino citizen > The promoter is a Filipino citizen or a corporation 60% of which is owned by Filipinos

TAX ON WINNING ON HORSE RACE Entertainment Place: • Bettor: Net winning on regular bet • Horse Owner: Gross winning

Tax: 10%

TAX ON WINNING ON HORSE RACE Entertainment Place: Bettor: Net winning on double, forecast/quinella and trifecta bets (combination bets)

Tax: 4%

TAX ON WINNING ON HORSE RACE T OR F? • The tax on winnings of bettors shall be based on net winning (after deducting the cost of the winning ticket)

TAX ON WINNING ON HORSE RACE T OR F? The tax shall be not deducted from the prize/dividend of the bettor and withheld by the operator or person in-charge of the horse race

F. The tax shall be deducted from the prize/dividend of the bettor and withheld by the operator or person in-charge of the horse race

GAMING TAX on Services Rendered by Offshore Gaming Licensees

• 5% in lieu of all other direct and indirect internal revenue taxes and local taxes, shall be imposed on gaming income of offshore gaming licensees. •

When is gaming tax shall be directly remitted to the BIR?

not later than the 20th day following the end of each month

Gaming Tax on Services Rendered by Offshore Gaming Licensees

PAGCOR or any special economic zone authority or tourism zone authority or freeport authority may impose regulatory fees on offshore gaming licensees which shall not cumulatively exceed two percent (2%) of the gross gaming revenue, or a predetermined minimum guaranteed fee, whichever is higher.

Gaming Tax on Services Rendered by Offshore Gaming Licensees T or F? Gross gaming revenue or receipts shall mean gross wages less payouts

T or F? The taking of wagers made in the Philippines and the grave failure to cooperate with the third-party auditor shall result in the revocation of the license of the offshore gaming licensee.

STOCK TRANSACTION TAX 1. Unlisted stock: 2. Sale of listed stock by non-dealers of securties 3. Sale of listed stock by dealers of securties

1. Unlisted stock: 15% CGT 2. Sale of listed stock by non-dealers of securties: 0.6% 3. Sale of listed stock by dealers of securties: 12% VAT

STOCK TRANSACTION TAX Tax base:

gross selling price

Stock transaction tax shall not apply to:

• Dealers of securities (subject to VAT) • Investors in shares of stock in a mutual fund > Persons exempted by tax laws under existing investment incentive and other special laws.

FILING AND PAYMENT OF PERCENTAGE TAX / OTHER MATTERS Persons liable in general : The _________________subject to percentage shall shall be held liable in filing and paying percentage tax.

person selling the goods or services

Person Liable to Pay Percentage Tax Persons liable in general - The person selling the goods or services subject to percentage shall shall be held liable in filing and paying percentage tax. • Exemption:

> Overseas communication tax - Payable by the person paying for the services and shall be remitted by the seller of service (i.e., billed to the customer, similar to VAT). > Tax on winning - The operator, manager or person in charge of the horse race shall withhold the corresponding tax and will be liable to remit the same. »Stock transaction tax - On sale of shares listed through the stock exchange, the stock broker shall collect the tax and remit the same. In case of initial public offering, the corporate issue shall be held liable to file and pay the tax.

Filing and Payment of Percentage Tax Type of percentage tax: Percentage taxes, in general Form to be Used: Deadline for Filing and Payment:

Form to be Used: BIR Form 2551Q Deadline for Filing and Payment: Quarterly, within 25 days after the end of each taxable quarter

Filing and Payment of Percentage Tax Type of percentage tax: Tax on Winnings Form to be Used: Deadline for Filing and Payment:

Form to be Used: BIR Form 1600 WP Deadline for Filing and Payment: Within 20 days form the day of withholding

Filing and Payment of Percentage Tax Type of percentage tax: Stock transaction tax Form to be Used: Deadline for Filing and Payment: In general: _____ from the date the tax was collected Initial public offering: ______from the date of listing

Form to be Used: BIR Form 2552 Deadline for Filing and Payment: In general: Within 5 days from the date the tax was collected Initial public offering: Within 30 days from the date of listing

Venue for filing: Every person liable to the percentage tax shall file, either electronically or manually, a consolidated return for __________________

all branches or places of business with any authorized agent bank, Revenue District Office through Revenue Collection Officer or authorized tax software provider.

Sale of Goods/ Services to the Government by Non-VAT Taxpayers The sale to goverment agencies, including GOCCs, shall be subject to a withholdingtax of ____ at source.

Sale of Goods/ Services to the Government by Non-VAT Taxpayers • The government agency shall issue BIR FORM _____ to the taxpayer. • The tax withheld shall be remitted by the govenment agency through BIR Form 1600-PT.

BIR Form 2307

Exemption from Percentage Tax

1. VAT Taxpayers - on revenues not subject to specific percentage tax. 2.Self-employed/Professionals opting the 8% income tax - The 8% tax is a bundled tax that covers both income tax and percentage tax. 3. Cooperatives- on revenue within its registered activity

T OR F? Self-employed/Professionals opting the 8% income tax - The 8% tax is a bundled tax that covers both income tax and percentage tax.

PERCENTAGE TAX Flashcards

(56 cards)