OTHER PERCENTAGE TAXES: LECTURE AID & PROBLEMS

1. Tax on VAT Exempt persons - (Section 116).

Rate: 3%
Basis: Actual Quarterly Gross Receipts
2. Tax on Domestic Carriers - (Section 117).
Rate: 3% tax applies only to receipts from transport of passengers.
Basis: In General, Actual Quarterly Gross Receipts
Exceptions:
Jeepney for hire, tax basis is actual or the following minimum quarterly gross receipts, whichever
is higher:
Provincial operation – P1,200
Manila and other cities – P2,400
Taxis, tax basis is actual or the following minimum quarterly gross receipts, whichever is higher:
Provincial operation – P2,400
Manila and other cities – P3,600
Public utility bus, tax basis is actual or the following minimum quarterly gross receipts, whichever
is higher:
If seating capacity is;
not exceeding 30 passengers – P3,600
exceeding 30 but not exceeding 50 – P6,000
exceeding 50 passenger – P7,200
Car for hire, tax basis is actual or the following minimum quarterly gross receipts, whichever is
higher:
If with chauffeur, P3,000;
If without chauffeur, P1,800
Note: Receipts from transport of cargo by common carriers are subject to value added tax on sale of
services.
3. Tax on International Carrier – (Section 118).
Applicable to international air and shipping carriers doing business in the Philippines.
A 3% tax is imposed based on actual gross quarterly receipts.
4. Tax on Franchise – (Section 119).
 Tax on Water, Electricity, and Gas utilities Franchise Grantees
Tax Rate and Basis: 2% based on actual quarterly gross receipts.
 Tax on radio and/or television broadcasting companies
Tax Rate and Basis: 3% based on actual quarterly gross receipts.

Note: When the actual quarterly gross receipts exceed Ten Million Pesos (P10,000,000), or regardless
of receipts, when the taxpayer opted to register voluntarily under the VAT system the value
added tax should be imposed.
5. Tax on Overseas Dispatch, Message or Conversation Originating from the Philippines – (Section
120).
Rate: 10% based on actual quarterly gross receipts.
Except the following who are exempted from the tax:
 Diplomatic services,  International Organizations,

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  News Services, and  Government
6. Tax on Banks and Non-Bank Financial Intermediaries – (Section 121).
The tax shall be applied based on the following schedule:
 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, such as:

Short-term maturity (not in excess of two (2) years) – 5%

Medium term maturity (over two (2) years but not exceeding four (4) years -
3%
Long-term maturity (over four (4) years but not exceeding seven (7) years)
1%
Long-term maturity (over seven (7) years) - 0%
 On dividends 0%
 On royalties, rentals of property, real or personal, profits from exchange and all
other items treated as gross income under the NIRC - 5%
7. Tax on Finance Companies – (Section 122).
A tax of 5% shall be collected on all gross receipts of finance companies from interest, discounts
and all other items treated as gross income under the Tax Code. However, interests, commissions,
and discounts from lending activities, as well as income from financial leasing, shall be taxed in the
same manner as banks.

8. Tax on Life Insurance Premiums – (Section 123).

Rate: 5%(2%)
Tax Basis: Quarterly Gross Receipts

9. Tax on Agents of Foreign Insurance Companies – (Section 124).

Rate: 10% for agents
5% for direct insurance by owners

10. Amusement Taxes – (Section 125).

A percentage tax shall be collected from the proprietor, lessee or operator of cockpits, cabarets,
night or day clubs, boxing exhibitions, professional basketball games, Jai-alai and racetracks,
equivalent to the following rates:
 Boxing exhibitions – 10%
 Professional basketball games – 15%
 Cockpits, Cabarets, night or day clubs – 18%
 Racetracks and Jai-alai – 30%
Tax Basis: Quarterly Gross Receipts

11. Tax on Winnings- (Section 126).

Tax Basis – Net winnings
Horse owner – 10% of the prize.
Bets winning – 10%, in general, except winnings from:
 Double, forecast/quinella and Trijecta bets, the tax shall be 4%.

12. Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded through the Local Stock
Exchange or through Initial Public Offering (Section 127).

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 Rate: ½ of 1% based on Actual Gross Receipts per transaction if sale is made through the stock
exchange.
If sold in an IPO, the tax shall be as follows:
 If shares sold are not more than 25% of the total outstanding shares after the IPO, the rate is 4%
 If shares sold are more than 25% but not more than 33 1/3% of total outstanding shares after the
IPO, the rate is 2%.
 If shares sold are more than 33 1/3% of the total outstanding shares after the IPO, the rate is
1%.
Note: The tax herein imposed shall be paid by the issuing corporation in primary offering or by the
seller in secondary offering.

Returns and Payment of Percentage Taxes – (Section 128).

Time of Filing of Percentage Tax Return: In General- Within twenty-five days after the end of each taxable
quarter.

Exceptions:  In case of Sale of Shares of Stock Listed and traded in the Local Stock Exchange, it shall be
the duty of every stock broker who effected the sale subject to the tax imposed herein to collect the tax and
remit the same to the BIR within five (5) banking days from the date of collection thereof.  In case of
primary offering, the corporate issuer shall file the return and pay the corresponding tax within thirty (30)
days from the date of listing of the shares of stock in the local stock exchange.

END 

PROBLEMS ON BUSINESS TAXES

1. The net sales of Leopard Marketing in any year never exceeded P550,000. The following
information are also available:

Inventory, January 1, 2003 P -0-

Gross sales, January, 2003 160,000
Sales returns and allowances 7,000
Sales discounts 3,000
Purchase price, from VAT suppliers, of goods sold, VAT included 66,000

Required: Compute the following:

a. Percentage tax on the sale of the month?
b. If the taxpayer opted to be a VAT taxpayer effective January 1, 2003, the value-added
tax payable for the month?

2. The Metropolitan Electric Co., Inc. is a holder of a franchise to sell electricity. In a particular month,
it had gross receipts of P1,000,000 for the sale of electricity. Its building had an auditorium and
theater which it rents out. For the same month, the auditorium and theater had gross receipts of
P200,000:
Required: Compute the franchise tax.(0?)
Percentage Tax = 36,000

3. Mrs. Simple Lang operates domestic carriers in the City of Dagupan. The following receipts during
the first quarter of 2004 were reported:
From ten (10) taxi units P24,000
From Five (5) bus units with 60 seating capacity 40,000
Twenty (20) units of jeepneys 50,000

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 Assuming receipts were evenly distributed to individual units of common carrier, compute the
percentage tax to be paid by Mrs. Lang during the first (1st) quarter.

4. Barbosa Lines operates 15 buses with a capacity of 45 passengers, plying the route from Cavite
City to Las Piñas City. The total gross receipts during the quarter amounted to P150,000.
Questions:
a. How much common carriers tax is payable by Barbosa Lines?
b. Assuming instead that the quarterly gross receipts amount to P88,000 only, how much
percentage tax should the company pay?
5. FPJ is a television broadcasting company. Its gross receipts during the preceding year amounted to
P9,500,000.
Required:
a. Assuming the actual quarterly gross receipts amounted to P2,000,000, how much
percentage tax should FPJ pay?
b. How about if the gross receipts during the preceding year totaled to 22,000,000?
c. What if the franchisee is other than radio and/or television broadcasting company or electric,
gas and water utilities and the gross receipts amounted to P7,500,000?
6. Rochelle Telephone Co. is engaged in selling telephone services to the public. Raul Punzalan
availed of Rochelle’s services by calling her girlfriend in China. He paid P5,000 for thirty minutes
call.
Question: How much is the overseas communication tax? What if the long distance call is made to
his sister in Cebu?
7. The Philippine Bank of Accountants (PBA) realized during the last quarter of 2004 the following
interest from lending activities:
Short term maturing instruments P200,000.
Medium term maturing instruments 100,000.
Long term, not over 7 years, maturing instruments 150,000
Long term, over 7 years, maturing instruments 50,000
Required: Compute PBA’s gross receipts (percentage) tax (GRT).

8. Cigu Rista insured his life with Tiyak Yewn Insurance Co. The total premium paid was P60,000.
Out of this amount, P48,000 was paid in cash and the balance in promissory note.
Question: How much is the tax on life insurance premiums?

9. Carrie Rista operates a racetrack. Other than the restaurant it operates, it also allows the Gloriants
to sell foods inside its premises. The gross receipts during the current quarter follow:

From operation of race track P1,100,000

From restaurant 1,000,000
From television coverage 1,300,000
From rental of Gloriants 1,200,000

Required: Answer the following questions:

a. How much amusement tax is payable by Carrie Rista?
b. Is the Gloriants’ restaurant subject to amusement tax?

10. Charmaine sold 10,000 shares of stock costing P95,000 for P100,000. The par value of the stock is
P9 per share.

Required- Compute the following:

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 a. Applicable tax if the shares are listed and traded in the Philippine Stock Exchange (PSE).
b. Applicable tax if the shares are not listed (traded) in the PSE

11. The following data were taken from the records of Toralba Company:

Cash sales P572,000

Installment sales 913,000
Sales on account 297,000
Sales returns 18,700
Sales discount 13,200

Required: Compute the gross selling price and the tax base.

12. Tindera Co, a VAT registered taxpayer, sold to Mommy Mely some pieces of merchandise. The
amount indicated in the invoice is P8,800. Subsequently, Mommy Mely sold the same goods to
Papa Billy for P11,000 who later sold the same to Baby Lee for P13,200.
Required:
a. Record the journal entries necessary to record the above transactions in the book of Tindera
Co.
b. Record the necessary journal entries in the applicable books of Mommy Mely.
c. Compute the VAT payable by Mommy Mely.
d. Record the necessary journal entries in the books of Papa Billy.
e. What is the tax consequence on Baby Lee of the above transactions?

13. Heaven Footsteps, a shoe mart, purchased 100 pairs of shoes from its distributor. Each pair is
worth P1,012 and sold by the shoe mart at P1,100. During the month, the management decided to
give one (1) pair of shoes to each of the ten (10) salesladies.
Required:
a. Compute the VAT payable by Heaven Footsteps.
b. Compute the VAT payable assuming that distribution of shoes to salesladies are not deemed
sale transactions.
c. For whose advantage are deemed sales transactions, to the taxpayer or to the government.

14. Aniano is engaged in a merchandising business. His sales and other data during the month of
January 2004 are shown below:
Cash sales P 770,000.
Sales returns on cash sales 55,000.
Installment sales 495,000.
Goods consigned
Jan. 1, 2004 P265,000
October 1, 2003 16,500
Goods taken for personal use 18,150.
Good taken as payment to creditors 25,850.
Purchases of merchandise 946,000.
Purchases of Supplies 88,000.
Telephone bills on domestic call 3,300.

Required: Compute the following:

a. Output tax.
b. Input tax.
c. VAT Payable.

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15. The following data reveals the March, 2004 records of Victory Corporation, a VAT registered
taxpayer:
Domestic sales P1,056,000
Export sales, F.O.B. shipping point 820,000.
Sale of goods to Five Star in China, but delivered to Pinay, a resident,
(payment was remitted in dollars by Five Star through BPI)
750,000.
Purchases of goods sold locally 575,300.
Purchases of raw materials on goods exported 423,500.
Required: Compute the VAT Payable by Victory Corporation during the month if it decides to claim as
tax credit the input tax corresponding to the export sale.
16. Coco Nat is engaged in purchasing copra from copra producers and process them into canned
cooking oil. In February 2005 he made total purchases of P800,000, processed them into canned
cooking oil and sold the same to the public. The taxable sales amounted to P2,090,000.
Purchases of canning and labeling materials totaled P269,500.
Questions:
a. How much is the presumptive input tax?
b. How much is the VAT payable if there is any?

17. Rhodora Company is engaged in business which is subject to value added tax. It also operates a
business which is subject to percentage tax. Its sales and purchases during the quarter are
shown below:
Invoice, VAT business P1,650,000.
Invoice, Non-VAT business 900,000.
Purchases, VAT business 385,000.
Purchases, non-VAT business 247,500.
Unallocated input taxes 40,000.
Required: Compute the VAT Payable by Rhodora Company.
18. Delta Bus Company is operating provincial buses from Dagupan to Baguio and Baguio to
Dagupan. Mr. Peter Pans took a ride on one of the buses for which he was issued two (2) tickets:
Ticket no. 669 covering his one (1) way fare of P280 and Ticket no. 670 covering his cargoes in
the amount of P220. Delta Company has accumulated VAT invoiced purchases, such as
lubricating oil in the amount of P55 and was in the amount of P66.
Questions:
a. Which of the above ticket sales is subject to VAT?
b. How much is the VAT payable of Delta Company assuming no other relevant information?
19. Engr. Del Hensia is a building contractor. His records show the following information about the
current quarter.
Price Collection
Contract A P2,200,000 P1,760,000
Contract B 4,000,000 3,300,000*
Contract C 2,500,000 385,000**
* Includes P1,100,000 advances for work to be done the following quarter.
** Contract C has been completed since last year. This amount represents receivable as of last
year collected during the current quarter.
Payments made:
For services of subcontractor P1,540,000.
Purchases of construction materials 682,000.
Wages of employees 450,000.
Purchases of supplies 55,000.

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 Required: Compute the VAT Payable.

20. Determine which of the following cases is subject to VAT.

Case Monthly Rent Annual Rent Answer
A P7,000 P600,000
B P8,000 P400,000
C P7,500 P450,000
D P9,000 P500,000
E P9,000 P600,000
21. Joey Imported goods from Hongkong for use in business. The following are the data relative to such
importation:
Invoice amount $ 9,500
Value of goods as determined by the BOC $11,200
Customs duties P10,500
Freight 6,000
Insurance 8,000
Other charges 12,500
Facilitation fee paid through fixers 10,000
After 20 days, the goods were sold to Mr. Quinto for P797,500. Exchange rate as of the date of
importation is P55.00 to a dollar.
Required: Compute the VAT Payable by Joey on:
a. the importation.
b. the subsequent sale.
22. Papa Libre, a tax exempt person, imported goods from the United States. Later, he sold them to
Dima Suerte, a non-exempt person. Who shall be liable to pay the VAT on importation?

23. Intel Company has the following records of output and input taxes during the third quarter of the
current year:
Output Input
Taxes Taxes
July P140,000 P165,000
August 257,000 198,000
September 190,000 156,000

Required: Compute the following-

a. VAT payable for the months of July and August.
b. VAT payable for the third quarter.

24. The following data pertain to the operation of a VAT registered taxpayer for the current relevant
period:

Sales invoices:
Cash sales invoices P462,000
Charge sales invoices 693,000
Purchase invoices:
Merchandise from VAT-registered business 495,000
Operating supplies from VAT-registered person. 121,000
Importation for sale locally (VAT inclusive) 275,000
Payment for operating services (VAT inclusive) 93,500
Various payments to non-VAT persons 71,500
Required: Compute the following:

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 a. Total output taxes for the period.
b. Total creditable input taxes for the period.
c. VAT payable for the period.
d. Cost of sales for the period.
e. Gross profit for the period.
f. Net operating income for the period.

25. The following data pertain to the activities of a general contractor:

Total billings for the accomplishments for the period:

Service fee inclusive of VAT P330,000
Construction supplies sold (VAT included) 27,500
Actual amount collected for services rendered 165,000
Total payments made to VAT persons for the period:
Construction supplies suppliers P110,000
Sub-contractors (VAT registered) 55,000

Required: Compute the following:

a. Total output VAT for the period.
b. Total input VAT for the period.
c. Net VAT payable (to be remitted).

26. A VAT-registered business has the following transactions for the current period:

Purchases inclusive of VAT P550,000.

Sales, with 10% VAT 544,500.
Export sales, exempt per treaty 165,000.

Required: Compute the following-

a. Total output VAT for the period.
b. Total input VAT for the period.
c. Net VAT Payable (to be remitted).