BUSINESS TAXES

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Introduction

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The objectives of this discussion

are the following:
To define business
To identify nature of business
To identify the different types of
business
To define business tax.
To identify the different business
taxes.
To identify businesses subject to
business taxes.
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Topics of Discussion
Nature of business
Characteristics/Nature of
business
Different types of business
Definition of business tax.
Different business taxes.
Businesses subject to business
taxes.

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NATURE OF
BUSINESS

Business or in the course of

trade of business
the regular conduct or
pursuit of commercial or
economic activity including
transactions incidental
thereto, by any person or
government entity.
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NATURE OF BUSINESS
Requisites of business:
1. A commercial or economic activity
- conducted for profit or income
2. Regularity in the conduct or pursuit
of commercial or economic activity
- more thbban one isolated
transaction
3. Must be a lawful economic activity
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EXCEPTIONS
IMPORTATION OF GOODS FOR
PERSONAL USE
PERSONAL OVERSEAS CALL
SERVICES RENDERED BY A
NON-RESIDENT FOREIGN
NATIONAL
ACTIVITY WITH GROSS SALES
OR EARNINGS NOT EXCEEDING
P100,000
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EXCEPTIONS
SALE OF HOUSE AND LOT &
OTHER RESIDENTIAL
DWELLINGS VALUED OVER
P3,199,200
WINNINGS IN HORSE RACING
OR JAI-ALAI
SINGLE SALE OF STOCK THRU
A LOCAL STOCK EXCHANGE
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TYPES OF BUSINESS

According to Nature
Trading or Merchandising
Manufacturing
Service
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TYPES OF BUSINESS

According to Form
Sole Proprietorship
Partnership
Corporation
Cooperatives
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BUSINESS TAX

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Definition of Business Tax

a tax on the onerous transfer of
goods, properties or rights in the
normal conduct of business.
Basis of Business Tax:
Net Sales for the sale of goods
whether collected or not
Gross Receipts for the sale of
services
whether earned or not

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CLASSIFICATION OF
BUSINESS TAXES

Excise Tax on sin products

levied on the production and
importation of products generally
harmful to the health, the
consumption of natural resources
and non-essential products

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CLASSIFICATION OF
BUSINESS TAXES
Percentage Tax (3%)
- a general consumption tax
- basically levied on retail sales
before consumption.
- based on 3% sales or gross receipts
of a non-VAT business

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CLASSIFICATION OF
BUSINESS TAXES
Value Added Tax (12%)
- levied on the consumption of goods
and the utilization of services in the
Philippines.
- applied in every stage of
distribution.
- allows tax credit.

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EXCEPTIONS TO THE REQUIREMENT OF ECONOMIC ACTIVITY AND

REGULARITY OF ACTIVITY TO CONSTITUTE DOING BUSINESS

Not an economic activity but subject to business

tax
a) importation of goods for personal use VAT
b) overseas communication even not
business-related
PTx
Not a regular activity but subject to business tax
a) services rendered in the Philippines
by non-resident foreign personVAT
b) isolated transactions
b-1) importation of goods for personal use
VAT
b-2) sale of house and lot and other residential
dwellings valued at OVER P2.5M
VAT
b-3) single overseas call PTx b-4) single winning
in horse racing/jai-a-lai PTx
b-5) single sale of shares of stock of a
domestic corp. thru local stock exchange PTx
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BUSINESS REGISTRATION
Annual Registration
Before start of its operation and renewal
must be before January 31.

Registration fee is P500 for every

separate or distinct business
establishment.
Separate or distinct establishment
includes a branch, warehouse or
facility
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BUSINESS REGISTRATION
Exempted from Registration Fee
Cooperatives
Individuals earning purely compensation
income
Overseas workers
Self-employed individuals where the
gross sales or receipts do not exceed
P100,000 per year

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BUSINESS REGISTRATION
VAT-REGISTERED
With gross receipts
or gross sales of
more than
P1,919,500 per year
With gross receipts
or gross sales of
P1,919,500 and
below per year and
opted to be
registered as VAT

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NON-VATREGISTERED
With gross
sales/receipts of
P1,919,500 and
below and opted
to register as NonVAT
Other percentage
taxes under
Section 116.

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GENERAL REQUIREMENTS
Invoices and Receipts
Taxpayer must apply for the Authority to
Print with the BIR before the printing of
business invoice and receipts.
Invoices and Receipts must be
registered with the BIR

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GENERAL REQUIREMENTS
Cash register machines and cash
register sales books or its equivalent
must be first registered with the RDO
before use.
Cash register machines must show
Proprietors business name
Business address
VAT or Non-VAT TIN Number
Amount and date of transaction
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EXCISE TAX
IMPOSED ON
Manufacturers
Importers
of any of the following categories of goods or
articles:
1. Alcohol products distilled spirits, wines,
fermented liquors
2. Tobacco Products cigars, cigarettes
3. Petroleum products
4. Miscellaneous imported articles and nonessential goods
5. Mineral products
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EMPHASIS ON EXCISE TAX

Not all manufacturers or importers are
subject to excise tax. Only when an article
is in any of the categories subject to excise
tax.
Not all those who handle the articles in any
of the categories mentioned will be subject
to excise tax. Only manufacturers or
importers of the articles in the categories
mentioned.
Excise taxes are on articles or goods.
Articles or goods are movable properties.
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PERCENTAGE TAX
Imposed on the sale or lease of
goods or properties or the
performance of services on non-VAT
registered person, other than the
transactions mentioned in
paragraphs (A) to (U) of section 109
of the tax code, the gross receipts or
sales of which do not exceed
P1,919,500 per year.
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PERCENTAGE TAX
Businesses subject to Percentage Tax
Domestic carriers and keepers of garages
Franchise
Overseas dispatch or message from the
Philippines
Bank and Non-bank Financial Institutions
Life Insurance Companies
Amusement Places
Sale of shares of stocks in the local stock
exchange
Businesses with annual sales of
P1,919,500 and below
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