SELF-PACED LEARNING MODULE

COLLEGE DEPARTMENT

MODULE 1
Subject:

BUSINESS TAX

AISAT COLLEGE – DASMARIÑAS, INC.

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 Unit Business Taxes
Module Introduction to Business Taxes
AE25-BT BUSINESS TAXES Units: 3hrs Page |2

INFORMATION SHEET PR-1.1.1

“INTRODUCTION TO BUSINESS TAXES”

What is Business?
 is an economic activity of buying and selling in order to obtain profit.
 “in the course of trade or business” means the regular conduct or pursuit of a commercial or
economic activity including transactions, by any person or government.
The requisites are: the purpose
a) The activity must be a commercial or economic activity; and is profit or income
b) There must be regularity in the activity. –the term “regular” involves more than one
isolated transaction. It requires repetition and continuity of action.
Illustration 1
Mr. A sold his car at a loss. There is no business tax. There is Zero(0) income or
profit
element in the transaction hence not an economic activity. There is no
regularity (even if sold at a gain)

Three (3) major business taxes in the National Internal revenue code namely:

a) Excise Tax
b) Percentage Tax, and
c) Value-added tax

The Excise Tax is on manufacturers and importers of

a) Distilled spirits (e.g. liquor)
b) Wines (e.g. grape wine)
c) Fermented liquors (e.g. beer)
d) Tobacco products (e.g. chewing tobacco)
e) Cigars
f) Cigarettes
g) Automobiles;
h) Yachts and other vessels intended for pleasure
i) Manufactured fuel oils (e.g. gasoline, diesel fuel oil, bunker fuel oil etc..)
j) Mineral Products (e.g. gold, silver)
k) Non-essential; goods ( jewelry, perfumes; and
Sellers of Services
l) Domestic procedures, surgeries, and body enhancements undertaken for aesthetic reasons.

* Dealers (those who buy and sell the articles are not subject to excise tax.

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st
PRELIM
1 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Taxes
Module Introduction to Business Taxes
AE25-BT BUSINESS TAXES Units: 3hrs Page |3

The Percentage taxes

 are on sales of services. (enumerated in the National Internal Revenue Code (NIRC). The
taxes are the following:
a) 3% percentage tax on sale of goods, properties or services
b) Common carrier’s tax on domestic carriers
c) Common carrier’s tax on international carriers;
d) Franchise Tax
e) Overseas communications tax;
f) Tax on banks and non-bank financial intermediaries performing quasi-banking
functions
g) Tax on insurance companies
h) Tax on agents of foreign insurance companies.
i) Tax on agents of foreign insurance companies
j) Amusement tax
k) Tax on winning; and
l) Stock transaction tax

The Value-added tax is on

a) Sale of goods or properties
b) Sale of services
c) Importation of goods

Can there be

Excise tax with value-added tax? Yes

Excise tax with 3% percentage tax? Yes
Excise tax with some other percentage tax? No
Value-added tax with percentage tax? No

Registration of Business

Every taxpayer subject to the value-added tax must register with the Bureau of Internal Revenue
(BIR) as a VAT taxpayer and pay an annual registration fee of every separate and distinct establishment,
including facility types ( sales outlets, places of production, warehouses and storage places where the
business is conducted.

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st
PRELIM
1 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Taxes
Module Introduction to Business Taxes
AE25-BT BUSINESS TAXES Units: 3hrs Page |4

Every taxpayer not subject to the value-added tax but subject to the excise tax or percentage tax
must register with the BIR and pay an annual registration fee for every separate and distinct
establishment where the business is conducted.
Illustration 2
Mr. F is a merchant. He has his main store in the City of Manila, a branch store in
Quezon City and another branch store in Pasay City.

There will be three separate registrations and three separate payments of the
registration fees.

Registration for value-added tax

Mandatory registration

Any person who, in the course of trade or business, sells, barters or exchanges goods or properties or
engages in the sale or exchange of services will be liable to register for value-added tax if

a) His gross sales or receipts for the past twelve months exceeded three million pesos
(P3,000,000)
b) There are reasonable grounds to believe that his gross sales or receipts for the next twelve
(12) months, will exceed three million pesos.

Optional registration

Any person who is not required to register as a VAT taxpayer because the sales, barters or exchanges of
goods or properties, or the sales or exchanges of services, in a twelve-month period do not, or will not,
exceed three million pesos (P3,000,0000, may opt to register under the value tax system.

The threshold of P3,000,000)

For purposes of determining the threshold of three million pesos (P3,000,000), the husband and wife
will be considered as separate taxpayers.

If a taxpayer has two or more line of businesses that would otherwise be subject to the value-added tax,
the gross sales/receipts will be combined for purposes of determining if the threshold was exceeded.
Any VAT exempt sales will not be included in determining the threshold.

Illustration 3.
Mr. A has three line of business, with gross receipt as follows.
Business 1 VAT exempt Business P 3,000,000
Business 2 Sale of Goods 1,800,000
Business 3 Sale of Services 1,800,000

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st
PRELIM
1 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Taxes
Module Introduction to Business Taxes
AE25-BT BUSINESS TAXES Units: 3hrs Page |5

Should there be a value –added tax?

The gross receipts of Business1 will not be included in determining if the taxpayer is subject to
the value-added tax. The gross receipts from Business 2 and Business 3 will be aggregated. The
aggregate exceeds P3,000,000 so that the two business are subject to the value-added tax

Cancellation of VAT registration

The registration of any person as a value-added tax payer may be cancelled if:
a) He makes written application and can demonstrate to the Commissioner’s satisfaction that
his gross sales or receipts for the following twelve (12) months will not exceed three million
pesos (P3,000,000); or
b) He has ceased to carry on his trade or business and does not expect to recommence any
trade or business within the next twelve (12) months.

When will the cancellation take effect? Answer. The first day of the following month.

Registration of invoices and receipts.

A taxpayer who is in business will have his invoices and receipts registered with the BIR. If a VAT
taxpayer, such invoices and receipts shall clearly show that he is a VAT taxpayer.

Reference Book:
A study on Business Taxes and Transfer Taxes
under the Train Law
Virgilio D. Reyes
2018 Edition

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st
PRELIM
1 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Taxes
Module Introduction to Business Taxes
AE25-BT BUSINESS TAXES Units: 3hrs Page |6

SELF-CHECK QUESTIONS PR-1.1.1.

“Business Taxes”

Directions: Answer the following:

1. What is business?

2. What are the requisites of business

3. What are the three major of business tax

4. Give at least 3 examples of business for each kind of business tax

5. What is VAT?

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st
PRELIM
1 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Taxes
Module Introduction to Business Taxes
AE25-BT BUSINESS TAXES Units: 3hrs Page |7

SELF-CHECK ANSWER KEY PR-1.1.

“Business Taxes”

Directions:

1. Business is a commerce or an economic activity.

2. 1. Must be a commercial or economic activity.

Must be regularity in the activity

3. 1. Excise Tax
2. Percentage tax and
3. Value-added tax

4. For : Excise Tax

1. Distilled spirits (i.e. liquor)
2. Wines
3. Cigarettes

For: Percentage Tax

1. Franchise Tax
2. 3% percentage tax on the sale of goods, properties or services.
3. Overseas Communication Tax

For: Value-added Tax

1. Sale of goods or properties
2. Sale of services
3. Importation of goods

5. Value-Added Tax – a tax of 12% is added to products at each stage of their production

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st
PRELIM
1 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Taxes
Module Introduction to Business Taxes
AE25-BT BUSINESS TAXES Units: 3hrs Page |8

STUDENT NAME: __________________________________ SECTION: __________________

PERFORMANCE TASK PR-1.1.1

PERFORMANCE TASK TITLE: : SIMPLE COLLAGE – MAJOR OF BUSINESS TAXES

PERFORMANCE OBJECTIVE: After completing this performance task, you were being knowledgeable in the
form of business taxes
TOOLS AND MATERIALS: Modules, newspapers, magazines, internet resources.

EQUIPMENT : none

ESTIMATED COST : none

PROCESS / PROCEDURE

Do simple collage for major of business taxes

Instructions :

1. Clip different kind of business according to major of business taxes. ( 3 examples each)
(upload pictures from social media may suffice). Categorize and make a label.
2. Use short bond paper only. ( maximum of 2 pages only)
3. Tasks must be neat and presentable.

PRECAUTIONS : • Indicate references in your performance task (i.e., https//[Link], etc…)

•Avoid copy and paste performance task of other
ASSESSMENT METHOD : PERFORMANCE TASK CRITERIA CHECKLIST

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st
PRELIM
1 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Taxes
Module Introduction to Business Taxes
AE25-BT BUSINESS TAXES Units: 3hrs Page |9

STUDENT NAME: _____________________________________ SECTION: ___________

PERFORMANCE TASK CRITERIA CHECKLIST PR-1-1.1

Did I … CRITERIA SCORING
1 2 3 4 5
1. Logic and key points. All corresponding ideas about the topic are
logically presented.
2. Content. Content of the essay flows and is passionate.
3. Cleanliness. Very clean and well presented.
4. Spelling and Grammar. No error in spelling and grammar.
5. Word usage. Word choice and usage are professionals.

GRADES

Teacher’s Remarks □ Quiz □ Recitation □ Project

5 - Excellently Performed
4 - Very Satisfactory Performed
3 - Satisfactory Performed
2 - Fairly Performed
1 - Poorly Performed

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st
PRELIM
1 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director