TAXATION

TAX.203 – Other Percentage Taxes (OPT) May 2019

LECTURE NOTES

A. Kinds of Percentage Tax:

v Tax on person exempt from value-added tax

(Sec. 116);

v Percentage tax on domestic carriers and keepers of garages (Sec. 117);

v Percentage tax on international carriers (Sec. 118);

v Tax on franchises (Sec. 119);

v Tax on overseas dispatch, message or conversation originating from Philippines (Sec. 120);

v Tax on banks and non-bank financial intermediaries (Sec. 121);

v Tax on other non-bank financial intermediaries (Sec. 122);

v Tax on life insurance premiums (Sec. 123);

v Tax on agents of foreign insurance companies (Sec. 1234);

v Amusement taxes (Sec. 125);

v Tax on winnings (Sec. 126);

v Tax on sale, barter or exchange of shares of stock listed and traded through the local stock exchange or

initial public offering (Sec. 127).

B. Tax on persons exempt from Value-Added Tax (Sec. 116).

v Requites:

1) Not a VAT registered person; and

2) The annual gross sales or receipts do not exceed 3,000,000.

v Exempt person - Cooperative

v Formula:

Tax base PXXX

Rate 3%

Percentage Tax PXXX

Summary Rule

Annual Gross Sales

/ Receipts

Business Tax Applicable

More than P3,000,000 VAT

P3,000,000 and below VAT or OPT

Note:

If the taxpayer opts to pay VAT, it will be irrevocable for 3 consecutive years.

C. Percentage tax on domestic carriers and keepers of garages (Sec. 117).

v Common carriers – refers to the persons, corporations, firms or associations engaged in the business of

carrying or transporting passengers of goods, or both by land for compensation, offering their services to the

public, and shall include transportation contractors.

v Person liable:

1) Cars for rent or hire driven by the lessee (rent-a-car);

2) Transportation contractors, including persons who transport passengers for hire;

3) Other domestic carriers by land for transport of passengers;

4) Keepers of garages.

v Exempt persons:

1) Owners of bancas

2) Owners of animal-drawn two-wheeled vehicles

v Formula:

Tax base PXXX

Rate 3%

Common Carriers Tax PXXX

v Tax base

1) Actual Gross Receipts

2) Minimum Gross Receipts

Whichever is

higher

TG I

PRISM

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Summary Rules

Type of Domestic Common

Carrier

Transporting? Business Tax Applicable

By Land Persons

Cargo / Goods

OPT

VAT

By Air Persons, Goods or Cargoes VAT

By Sea Persons, Goods or Cargoes VAT

Note: The application of update Minimum Quarterly Receipts has been suspended by

Congress

D. Percentage tax on international Carriers (Sec. 118).

v Person liable:

1) International Air Carriers

2) International Shipping Carriers

v Formula:

Gross Receipts PXXX

Rate 3%

Common Carriers Tax PXXX

v Gross Receipts – Shall include, but shall not be limited to the total amount of money or its equivalent

representing the contract, freight/cargo fees, mail fees, deposits applied as payments and other service

charges and fees actually or constructively received during the taxable quarter from cargo and / or mail,

originating from the Philippines in a continuous and uninterrupted flight, irrespective of the place of sale

or issue and the place of payment of the passage documents. (RA No. 10378, RR No. 15-2013)

Summary Rules

Airline / Shipping Co. Business Tax Applicable

Domestic Corp. VAT

Resident Foreign Corp. OPT

E. Tax on franchises (Sec. 119).

v Person liable:

1) Franchise on Gas and Water Utilities

2) Franchise on Radio and/ or Television Broadcasting Companies

v Requisites for franchises on radio and/ or television broadcasting companies:

1) Not a VAT registered person; and

2) Annual gross receipts of the preceding year do not exceed P10,000,000.

Summary rules applicable to radio and/or television broadcasting companies

Annual Gross Receipts Business Tax Applicable

More than P10,000,000 VAT

P10,000,000 and below VAT or OPT

Note:

If the taxpayer opts to pay VAT, it will be irrevocable.

v Formula: