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Chapter 9

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Chapter 9

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christinejoyyypalaganas
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Chabter 9 Other Percentage Taxes Generally, vat is imposed on every sale, barter, or exchange of goods or services and on importations. “However there are. instances where the same does not apply because the transaction is subject to Other Percentage Taxes (OPT) under Sections 116 to 127 of the Tax Code, as amended. As discussed in Chapter 7, a “transaction” that is subject to vat is no longer subject to percentage tax. Consequently, if the “transaction” is subject to Percentage tax, it is no longer subject to vat. Nonetheless, other percentage taxes as well as value added tax may be imposed together with excise tax. Percentage tax is a tax imposed on sale, barter or exchange of goods, or sale of services based upon gross sales, value in money of receipts derived by the manufacturer, producer, or seller measured by certain percentage of the gross selling price or receipts. The Percentage taxes are provided in the Tax Code under Sections 116 to 127, as amended. KINDS OF PERCENTAGE TAXES: 4) Tax on person exempt from value-added tax (Sec. 116); 2) Percentage tax on domestic carriers and keepers of garages (Sec. 117); 3) Percentage tax on international carriers (Sec. 118); 4) Tax on franchises (Sec. 119); ; : 5) Tax on overseas dispatch, message or conversation originating from Philippines (Sec. 120); o 6) Tax on banks and non-bank financial intermediaries (Sec. 121); 7) Tax on other non-bank financial intermediaries (Sec. 122); 8) Tax on life insurance premiums (Sec. 123); 9) Tax on agents of foreign insurance companies (Sec. 124); 10) Amusement taxes (Sec. iw ie i 1 ings (Sec. 126); ani . 2) ix See ‘or exchange of shares of stock listed and traded through the local stock exchange (Sec. 127). 355 Pereentage Ti a SSRIS - TAX ON PERSONS EXEMPT FROM VALUE-ADDED TAX Section 116 of the Tax Code, as amended by CREATE Law provides: ‘Any person whose sales or receipts are exempt under Section 109(1)(CC) ofthe Tax Code from the payment of value added tax AND who is not a VAT-registered person shall pay a tax equivalent to three percent (3%) of his gross quarterly sales or receipts: Provided, that cooperatives, shall be exempt from the three percent (3%) {gross receipts tax herein imposed: Provided, further, that effective July 1, 2020 until June 30, 2023, the rate shall be one percent (1%). PERSONS LIABLE: 1) Persons, who are not VAT-registered, who sell goods, properties or services, whose annual gross sales and/or receipts do not exceed three million pesos (Php3,000,000.00) and are exempt from value- added tax (VAT) under Section 109(1)(CC) of the National Internal Revenue Code, as amended by Republic Act (RA) No. 11534 (CREATE Law). 2) Persons who lease residential units where the monthly rental per unit exceeds fifteen thousand pesos (Php15,000.00) but the aggregate of such rentals of the lessor during the year does not exceed three million pesos (Php3,000,000.00) EXEMPT PERSON (CREATE Law; RR 4-2021): 1) Cooperatives 2) Self-employed individuals and professionals availing of the 8% tax on gross sales and/or receipts and other non-operating income. REQUISITES: ; To following are the requirements be subjected to Percentage Tax under this Section of the Tax Code as amended under RA 11534 (CREATE Act): 4) Not VAT registered person 2) The annual gross sales oF receipts do not exceed 3,000,000; and 3) Not exempt from vat under Section 409(1)(A) to 109(1)(88) of the Tax Code, as amended. 356 lrrcentute Th a treeulage Lies exceeding the vat threshold ig NOT Gi Ses. andor: receipt ax under this Section of the Tax cy a tially Subject to Peranage of the activities or transact +f the taxpayer i i to 109(1)(BB), as emanate exempt from vat intense ee Ost yercentage tax under thig by HD CREATE Law, She is not sb Eales andor receipts, such acta f08cesS of tho amount of ress marine fOod products in they e206 In the sale of agricultural or erentage tx under this sauinn anal Sale. To be subjected to be subject to other percent org the taxpayer r * tage te H ‘payer must not also domestic common carrier ei a iinet Sections 117 to 127, such as a ransport of passengers by land. TAX BASE: Sale of goods : Gross. Sale of services sales + Gross receipts FORMULA: Tax base (gross sales Multiply: tire eet Pox = Prior to July 1, 2020 3% = From July 1, 2020 to June 30, 2023 (CREATE law) 1% = Beginning June 30, 2023 (CREATE law) 3% Percentage tax due Prk OPTION TO REGISTER UNDER THE VAT: SYSTEM Persons subject to the above tax shall have the option to apply for vat registration not later than ten (10) days before the beginning of the taxable quarter (optional vat registration is discussed in Chapter 7). Any person under this section who elects to register under the vat system shall not be allowed to cancel his registration for a period of three (3) years. ‘Summary Rules [__ Annual Gross Sales/Receiots, | More than PSM Generally subject to OPT under Seo. en ee | 416. However, ifthe taxpayer opted to register under the vat system, it shall be irevocable for 3 consecutive yeas. LL 357 Percentage Tees VAT Threshold for Married Individuals For purposes of the threshold of P3M, t it be considered separate taxpayers. However, the Sereeaen| nine babes taxpayer shall apply. For instance, if a professional, aside from the practice of his profession(s), also derives revenue from other line: ‘ business which are otherwise subject to VAT, the same shall be combin a for purposes of determining whether the threshold has been sae Thus, the VAT-exempt sales shall not be included in determining the threshold. (Sec. 3, RR 16-2011). 9 the ILLUSTRATION 1: Determine the correct business tax of the following: 1. Meat dealer with annual gross sales of P2,000,000 = None. Exempt from business tax under Sec. 109(1)(A) regardless of the | amount of gross sales. 2. Dealer of pouttry feeds with annual gross sales of P8,000,000 =. None. Exempt from business tax under Sec. 109(1)(B) regardless of the amount of gross sales. 3, Dealer of specialty feeds with annual gross sales of: (a)P2.5M; (b)P2.5M and vat registered; (c)P5M = A: Percentage tax under Sec. 116 = B Vat because the taxpayer is vat registered and the item sold is not vat exempt under the Tax Code. = C Vatbecause the taxpayer's annual gross sales exceeded the vat threshold and the item sold is not vat exempt under ‘the Tax Code. 4, Restaurant operator with annual gross sales of (a)P2.6M; (b)P2.5M and vat registered; (c)PSM = Same answers with #3. 5. Taxi operator ' domestic common = Percentage tax under Sec. 117 (common carrier's tax on cari) regardless of the amount of gross receipts To be subjected 4 Percentage tax under Sec. 116, the transaction shall not be i - roentage tax under Sec. 117 to 127 and ‘shall not be exempt from vat Un ‘Sec. 109(A) fo 109(AA). oe Le eee 258 Cecentuge Tats 6. CPA practitioner whos . 88 a and Vat registered, topey S08 receipts amounted to: (P25 (0)P2.5M | "A: Percentage ta B Vatbcaie the anger Se. 116 Vat because nar Val registered % Sele at tone et | ee ide tne Tax Code. a ILLUSTRATION 2 (Corporat Taxpayers) CASEA ABC Trading Corporation (none, k the year 2021 were pow “i oe {a trader of electronic products. Data for Gross receipts 1,800,000 Purchases on account from vat supp 200, lies Payments made ovat suppers “jonon0 Purchases on account from non-vat suppliers 200,000 Payments made to non-vat suppliers 80,000 Operating expenses 400,000 Question 1: What is the applicable business tax andthe amount du forthe year? Answer: * Applicable business tax. 1% OPT on vat exempt sales under Section’ 116 because: ‘ a) The taxpayer is not vat registered; + b) The transactions nota vatexempt transaction; + c) The amount of sales is $ P3M; + d) The transaction is not subject to OPT under Sections 117 to 127 = Amount of business tax due. 18,000 computed as P1.8M x 1% Question 2: : : 7 ‘Assuming ABC opted to register under the vat system, what is the applicable business tax and the amount due for the year? Answer: Me * Applicable business tax: 12% VAT (optional vat registration) = Amount of business tax due: P72,000 ‘Output vat (P.M x 12%) 216,000 Input vat (P1.2M x 12%) (144,000) Vat Payable P72,000_ 359 f ‘ercentage Tages * CASEB Omega Corporation (non-vat registered entity) is engaged in trading consumer products, It generated total sales of P3,200,000 forthe taxable year. Question: What is the applicable business tax and the amount due for the year? Answer: = Applicable business tax: 12% VAT; (gross sales > 3,000,000) = Amount of business tax due: P384,000 computed as P3.2M x 12% still liable to 12% vat NOTE: Although Omega is a non-vat registered entity itis ecause the sales exceeded the vat threshold of P3M (under TRAIN Law), Fowaver, as a consequence of ifs faire to register under the vat system, it cannot pass to customers the applicable output vat and is not eniitled to input vat credit. SELF-EMPLOYED/PROFESSIONAL (SEP) under the TRAIN Law able taxes of a Self-employed and/or Professional is The applic ur other textbook, “Income Taxation”. also extensively discussed ino is defined under RA10963 (TRAIN Law) as “a sole rts income earned from ks for, how the work is Is whose income Is loyer Self-employed is proprietor or an independent contractor who repor self-employment. He/she controls who he/she wor done and when it is done. It includes professional: derived purely from the practice of profession and not under an emp! — employee relationship”. Professional is defined under RA10963 (TRAIN Law) as a “person formally certified by a professional body belonging to a specific profession by virtue of having completed a required course of studies and/or practice, whose competence can usually be measured against an established set of standards. It also refers to a person who engages in some art or sport for money, as a means of livelihood, rather than as a hobby. It includes but is not limited to professional entertainers, professional athletes, directors, producers, insurance agents, insurance adjusters, management and technical consultants, bookkeeping agents, and other recipients ©! professional, promotional and talent fees”. tig FORRES ren | | L *reenlag C Toes ‘SEP is subject both to income tax and business tax. as follows: ey i wilh Gross Salos andlor Recoips and othor non-operating income ee OLA MMe ee CAA ad Applicable Taxes Income Tax; Graduated Tax Rate Business Tax: OPT under Sec, 116" Applicable Taxes Income Tax. Graduated Tax Rate | Business Tax: Value Added Tax | OR (at SEP’s option) 8% tax on gross salesireceipts and other Operating income in excess of P250,0001N LIEU of the graduated income tax rale and the | Per Tax under Sec. 116" NV jonvat registered Provided, the SEP is (1)non-vat registered; (2)not engaged in val exempt-sales\transaction(s), (3)not subject to other OPT other than Sec. 116 “**Provided, the SEP is (1)not engaged in vat exempt-sales/transaction(s) or (2)not subject to other OPT Individual Taxpayer eaming Compensation income + Sel-Employed andlor Professional with Gross Sales and/or Receipls and other nor-operating income NOT EXCEEDING THE VAT THRESHOLD + NVR (eu OR Uia Compensation Income Compensation Income Subject to graduated tax rate Subject fo graduated fax rate Income as S.E.P.; Income Tax: Graduated Tax Rate Business Tax: Value Added Tax Income as S.E.P.: Income Tax: Graduated Tax Rate Business Tax: OPT under Sec. 116" OR (at SEP’s option) 8% tax on gross sales/receipts and other operating income IN LIEU of the graduated t income tax rate and the Percentage Tax under ee APIO Tam gross salesTecepis I nl appicable 10 “ied income eamers 361 L ‘tresubife Tees OPTION to be taxed at 8% The option by a Self-employed and/or Professional (SEP) to be taxed at 8% in lieu of the graduated income tax rate and Percentage Tax under Section 116 of the Tax Code is not automatic. The following are the requisites: 4. The taxpayer is non-vat registered. 2. The taxpayer is vat exempt under Section 109(CC) of the Tax Code, as amended. Hence, the reason for vat exemption is simply because the annual gross sales and/or receipts did not exceed the vat threshold of P3,000,000. Therefore, persons exempt from vat due to reason(s) other than having gross sales and/or receipts not exceeding the vat threshold such as those exempt under Section 109(A) to 109(BB) are not covered under Section 116 (refer to Chapter 8 for vat exempt sales). 3. The taxpayer is not subject to other percentage taxes other than Sec. 116 4. The SEP shall signify his/her intention to be taxed at 8% rate. Unless the taxpayer signifies in the at Quarter Return of the taxable year the intention to elect the 8% income tax,.the taxpayer shall be considered as having availed of the graduated rates under Section 24(A) of the Tax Code, as amended, and such election shall be irrevocable. Provided that, at any time during a given taxable year, a taxpayer's gross sales or receipts ‘exceeded the VAT Threshold (P3,000,000), he/she shall automatically be subjected to the graduated rates under Section 24(A)(2)(a). of the Tax Code,, as amended, with the following rules/guidelines: * The taxpayer shall be allowed an income tax credit of quarterly payments initially made under the 8% income tax option. = Taxpayer is likewise liable for business tax(es), in addition to income tax. A percentage tax pursuant to Section 116 of the Tax Code, as amended, shall be imposed on the first P3,000,000.00. The excess of the threshold shall be subject to VAT. ‘int = Percentage tax due on the P3,000,000.00 shall be collected witha penalty, if timely paid on the due date immediately following the mont! the threshold was breached. Tacs Percent ILLUSTRATION 3 - INDIVIDUAL TAXPAYERS; Puroly SEP: CASE A; Pedi i Pe sms engaged inthe following during 2021 taxable year; Trucking business (Gross a 7 4,600,000), Lease of apartments (monthly rental is 14,500 per unit, annual ceipts 1,200,000), Practice of accountancy, gross receipts P900,000. Question. Whats the applicable business tax of Pedro for 20217 Answer: Applicable business tax. 1% OPT under Section 116 of the Tax Code, as amended , NOTE: If a professional, aside from the practice of his profession, also derives revenue from other lines of business which are otherwise subject to VAT (trucking business and practice of profession with aggregate amount of P2.5M), the same shall be combined for purposes of determining whether the vat threshold of POM has been exceeded. The lease of apartment is exempt from business tax, as discussed in the previous chapter, hence, shall not be included in determining the threshold (Sec. 3, RR 16-2011). CASE B: Pedro is a big time fish dealer. His gross receipts during 2021 taxable year amounted to 5,000,000. Question 1: What is the applicable business tax and the amount due that Pedro should pay for the year? ‘Answer: + Applicable business tax: None, Pedro's engaged in a vat exempt sale NOTE: Under Section 109(A) of the Tax Code, sale of agricultural and marine food products in their original state is exempt from vat (refer also to discussions in Chapter 8). ole only to taxpayers who are not subject to vat because their gross sales or receipts do not ‘exceed the vat threshold of PIM. and the transaction is not included in, the list of vat exempt salesitransactions under Sec.109(1)(A) to 409(1)(BB). Since the sale is vat- fexempt under Section 109(1)(A), Pedros likewise ‘exempt from Percentage Tax under Section 116, regardless of the amount. ‘of gross sales and/or receipts. Section 116 of the tax code is applica Although Pedro is exempt from business tax, using the graduated tax rate. 363 he is still subject to income tax Percentage Li i (bes Question 2: / Assume Ped is also engaged in leas Assume further that his total gross re¢ 1,500,000, what isthe applicable business ‘apotca 4% OPT (from lease of delivery trucks on » Applicable business tax. ‘under Section 116 of the Tax Code, as amended. His sales as a fish dealer remains to be exempt from business t2X- ing-out ls delivery tucks to other fish deateys veins rom such ansaction amounted tax and the amount due for the year 20217 NOTE: (a) income from lease of properly (real or per transaction ; fb) Pedro is not a vat registered person e Pedro's gross receipts | from leasing is not more than the vat threshold (9) Peet isnt engaged in a ranscton subject 10 olher Peerage Tex oer than Section 116 = Business tax due. P15,000; (P1,500,000 x 1%) sonal) is not a vat exempt Question 3: ‘Assume the same data in Question #2 except that Pedro opted to be taxed at 8%. How much is the amount of business fax that Pedro should pay under Section 116? = Answer: None NOTE: The 8% tax is in LIEU of income and business tax under Section 416. The 8% tax is computed as follows: Gross receipts Less: ‘Amount subject to 8% tax 1,250,000 Tax rate 8% 8% Tax. 100,000 (2) ‘This amount represents two taxes, income fax in lieu ofthe graduated jncome tax table and business tax under Section 116. Question 4: ‘Assume the same data in Question #2 except that Pedro is vat registered, what should be the applicable business tax and the amount due that he should pay for the year? = Answer: Applicable business tax. 12% vat (from lease of delivery trucks only) Business tax due: P180,000 computed as = P1,500,000 x 12% NOTE: I the SEP is val registered, the option tobe taxed at 8% 1s not applicable. provided under TRAIN Law, the option to be taxed at 8% is available ony to taxpayer \Wwho are (a)non-VAT registered; and (b)iable for 3% percentage tax under Section 1160 the NIRC. As such, the following shall have no other option than fo be taxed usitd graduated rates (or income tx) and Vat or OPT ater than Section 116 (or bushes tax), (1)VAT registered taxpayers; and (2) those liable for OPT under Tite V of the NIRC (See. 117 to Sec. 127). 364 Live calage Tawes CASE C: Pedro is a taxi operator, His gross receipts during the taxable year amounted to 5,000,000, Question: Whats the applicable business tax and the amount duo forthe year? Answer: Applicable business tax: 3% Common Carrier's Tax under Section 117. NOTE: As explained in Caso B #4, the option to be taxed at 8% isnot applicable to Pedro as a taxi operator because he is taxable under Section 117 of the Tax Code. | addition to Section 117, Pedro is also liable to income tax using the graduated tax rate, ILLUSTRATION 4 (SEP earning mixed income): Pedro (non-vat registered) is self-employed involved in trading electronic products and Paresime Professor of May Pag-asa College, Data forthe taxable year were provided as lows: Compensation income 800,000 Gross sales 2,800,000 Purchases on account from vat suppliers (net) 1,200,000 Payments made to vat suppliers 800,000 Purchases on account from non-vat suppliers 200,000 Payments made to non-vat suppliers 80,000 Operating expenses 1,200,000 Question 1: What is the applicable business tax and the amount due that Pedro should Pay for the year? Answer: = Applicable business tax: 1% OPT under Section 116 = Amount of business tax due: P84,000 computed as 22,800,000 x 3%. NOTE: The compensation income is not subject to a business tax. Question 2: Assume the same data in Question #1 except that Pedro opted to be taxed at 8%. How much is the amount of business fax that Pedro should pay under Section 116? :* “Answer: None NOTE: The 8% tax is in LIEU of income and business tax under Section 116. This amount represents two taxes, income tax in lieu of the graduated income tax table and business tax under Section 116. The P250,000 deduction —_ presented in Illustration 2, Case B, Question #3 is not applicable to SEP earning mixed income. 365 2, 7 trcenlide Tare Fe he vat threshold during the year): fiioner. She indicated her intention to be -vat registered CPA practitionef. he in taxed at aetna " ‘natty income tax retum. a 8s tO a Were a follows; January to September, 3,000,000; October to ILLUSTRATION 5 (SEP exceeded t Question 1: 4 How much should be her total business tax for the year? Answer: P150,000 computed as follows: [Link] Sept: Percentage Tax under Sec. 116, (PSM x 174) panoaa PIM x 12% 120,000 Octo Dec.: VAT, PIM x ae Total business tax Question 2: When should Ana register under the vat system? ‘Answer: Not later than November 30, 2021 (RR 13-2018) NOTE: > The taxpayer shall be allowed an income tax credit of quarterly payments initaly made under the 8% income tax option. > Taxpayer is likewise liable for business tax(es), in addition to income tax. A percentage tax pursuant to Section 116 of the Tax Code, as amended, shall be inpoed on the fist P3,000,000.00. The excess of the threshold shall be subject to | | | | > Percentage tax due on the P3,000,000.00 shall be collected without penalty, i time pai on the due date immediately following the month the threshold was reached. —— Vercentaye Tages oe PERCENTAGE ta; CARRIERS AND KEEPERS oF GARAGES eee Cars for rent oF hite driven by the los Foren got hit, and other domestic cartons ty land for the transport of passeng AsSeNgers (except $. two wheeled veil) an tcar oM2 of barca and canes of andra percent (3%) oftheir quarry oi rea Shall pay a tax equivalent to three The gro: n ia a ree 7 peaearcaies cated {rom their incoming and outgoing '¢ local taxes imposed c 7160, othenvise known as the Local Government Code oot, nn Percentage Tax under this Section of the Tax Code is also known as 3% common carriers tax (CCT), which gross receipts of operators of: ) shall apply to the quarterly Cars for rent (rent-a-car business) + Cars for hire driven by the lessee * Transportation contractors including those who transport passengers such as tourist buses for hire Other domestic carriers by land for transport of passengers; and * Keepers of garages TAX RATE AND BASIS: 3% OF GROSS RECEIPTS. Common carriers tax (CCT) under this provision pertains to percentage taxes of domestic common carriers by land for the transport of passengers only. However, CCT shall not apply to: (1) owners of bancas, and (2) animal drawn two-wheeled vehicles. Likewise, Republic Act No. 7160 (Local Government Code of 1991) provides that gross receipts of common carriers derived from their incoming and outgoing freight shall not be subject to the local taxes. Domestic common carriers by air or sea are subject to vat on their gross receipts from their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines (RR 16- 2008). International flights or shipments of domestic carriers by air or sea shall either be subject to 0% vat (zero rated) or vat exempt, depending on whether the entity is vat registered. Zero-rated vat shall apply only to vat registered domestic carriers while non-vat registered domestic carriers are exempt from value added tax (Refer to Chapter 8). 367 Percentage Tee = RMC 70-2015 OMPANIES ig pool of land tra TAP NEan Nt, Vo So on Ein phot act : : ng pu jor cali , mobile applicator wnat etn ec ahr tere Tay his usod in transporting passenger a a on People andr ens ote han the TNC, and shall be iness Taxes for TNCs and ‘Partners eee Sr NceParners vate “Certificate of| oa i oe Oe INSport of ase tse Oe saan conto Soe 2% VAT or 3% OPT under Sec. 116 of he Tax Code. rly gtoss receipts Per Unit Carrier PUMEM nc ee 2,400 Jeepney for hire a ania and ober cies 1,200 2. Provincial Public Utility bus a a. Notexceeding 30 passengers i b. Exceeding 30 but not exceeding 50 passengers 6,000 c. Exceeding 50 passengers 7,200 Taxis 4. Manila and other ciies 3,600 e. Provincial 2,400 Cars for hire f. With chauffeur 3,000 Without chauffeur 11800 Senate Commitee Report No. 37 (Gated 11 February 2008) suspended the implementation ofthe revised minimum gross receipts under RR No. 9-2007. Consequently, the ld minimum gross receipts shown in the table above shall still apply. Art. 1732 (NCC) Section 117 of the Tax Code refers to domestic Common carriers common carriers engaged in the transport of passengers by are —__pe's0ns, land, Hence, domestic common carriers by land transporting cuprates m= cargos or goods shal be subject fo value added txt creaged in the Of the 3% common carer's tax, However, the 3% business of carving Peteetage tax on vat exempt entities based on Section 116 cr transporting Shall be applicable if the domestic carrier transporting passengers orgoods SAEOES oF goods is not vat registered and gross receipts do oa by end not exceed the vat threshold of P3,000,000. ‘This rule shall , of ait, for also apply to domestic carriers by air and sea. The 3% cee a oe Carriers tax under this section (Section 117) shall be serioes to the “stnguish from the 3% percentage tax on entities or persons publi exempt from vat under Section 116, 368 L *treentaye Tieees The i ne different applicable business taxes of “domestic” common carriers are shown in Table 9-2 below: MEE KG) ettof__ Business Tax Passengers 3% CCT (See. 117) regardless of gross receipts [_Seods/Cergoes f+ VaTor Sex 16 ORSPOM & not vote. | Passengers |__| VAT or Sec. 116 if GRSP3M™ & not vat reg. Goods/Cargoes >} VAT or Sec. 116 if GRSPIM* & not vat reg. Int'l flights/shipments of — |_| 0% VAT if vat registered, otherwise vat “domestic” carriers exempt NOTE: ‘= Vatis imposed on sale of goods or services rendered inthe Philipines only. As such, transport of passengers and goods from international fights of domestic common carriers are not subject to vat = Transport operations of common carriers originating abroad is not subject to business tax in the Philippines. ILLUSTRATION 6: a Victory Express is a domestic common carrier by land engaged mainly in the transport of passengers in Luzon areas, Due to the increasing demand to transport goodsleargoes, the company decided to aoquire additonal bus unis exclusively intended fr tis purpose, The company is non-vat registered. The resuts of operations forthe calendar year 2021 are as follows: Gross receipts - transport of passengers ST Gross receipts — transport of goods ‘s0000m0 Purchases - supplies and services f eo Other operating expenses . ee Question 1: What amount should be recognized as common carriers tax? +» Answer: P1,500,000. (P50M x 3%) 369 Prreentege Teas : it vat? Question 2 What amount should be recognize to outpul Answor: P1,800,000. (PRISM x . argos oxcoods th Val thestoy Ar tor transport of goods of COME Te 7 aH, However, being a non-vt register enty, Veto Express cant ass an Pet aners fon rensprt of gooaseargoos) MMP ‘applicable output vat and isnot entitled to input vat cred m transport of "goods" amounted to ‘as business taxes? follows: Question 3- Assume that Victory's gross receipts fror 1,500,000 only, What amount should be recognized * Answer 1,545,000 under Section 116 computed as ‘Common carriers tax under Sec. 117; (50M x 3%) Px 0,008 3% OPT under Sec, 116; (P1.5M x 3%) 5 000 Total business taxes - 1,545,000 ILLUSTRATION 7: . Philippine Air, a vat registered domestic air carrier provided the following data for the current taxable year: Gross receipts — transport of passengers 50,000,000 Gross receipts transport of goods 10,000,000 20,000,000 Purchases (supplies net of vat) Question 1: How much is the applicable business tax due assuming the revenues were derived from its domestic operations? +» Answer: P4,800,000 (val) Output vat (P5OM + 10M) x 12% 7,200,000 Input vat (P20M x 12%) (2,400,000 Vat Payable 4,800,000 Question 2. How much is the business tax due/(refundable) assuming the revenues were derived from its intemational operations originating in the Philippines, “Answer: Vat refundable of P2,400,000 Output vat (P6OM x 0%) PO Input vat (P20M x 12%) (2,400,000) Vat Payable (Refundable) (P2,400,000) Question 3. How much is the business tax due/(refundable) assuming the . ihe i é " le revenues were derived from is international operations withthe folowing br aa cokiat the Philippines and 50% originating abroad. 9 breakcown; 50% originating in ‘Answer; Vat refundable of P1,200,000 ag Output vat (P6OM x 50% x 0%) Po Input vat (P2OM x 50% x 12% ti Vat Payable (Refundable) ’ f ont Q (P 1,200, 2) The revenues on its fights Originating abroad is not subject to business tax. 370 i k | Pereetage Tages sstion 4 Same assumption in registered entity. How much Is tha Question #2 except that the company is a non-vat business tax due? “+ Answer: PO The company is vat a exempt be fo intemational fights of ome ane raged ‘only and the fights pertain PEI : SSaUERE RCENTAGE TAX ON INTERNATIONAL CARRIERS Answer: P180,000 (PM x 3%) Under the new law (RA10378) as implemented 13, international carriers (resident foreign corporations) ete ard ‘common carriers tax On gross receipts from transport of goods/cargoes originating in the Philippines. Prior to the implementation of RA10378, 372 Parcentage Tages international carriers al r receipts from the transport of pas ra oceans 19ers and goods/cargoes, question 2: What is the applicable income tax rate? hi } Answer: In general, | based on gross Phaser Carriers aro subject to 2.5% income tax “preferential | bilings unless ‘exempt’ or subject to a treatyintomational tax rate" on the basis of tecprocly or copie tax Agreement to which the Philippines is a signatory. Question 3: How much is the i subject to a preferential tax rate wes Cue a88uming the International cars neither n exempt “Answer: P450,000 ize) Question 4: How much is the income toa preferential tax rate of 1.5% on Gi international agreement? “Answer: P270,000 (P18M x 1.5%) tax due assuming the international carrier is subject Os8 Philippine Bilings under an existing tax treaty or Question 5: How much is the income tax due assuming the international carrier is exempt from income tax based on reciprocity? . % Answer: PO Seite ke) - TAX ON FRANCHISES. ‘Any provision of general or special law to the contrary notwithstanding, there shall be levied, assessed and collected in respect to all franchises on radio and/or television broadcasting companies whose annual gross receipts ofthe preceding year does not exceed Ten million pesos (PhP10,000,009,, subject to Section 236 of this Code, a tax of three percent (3%) and on gas and water utiles, a tax of two percent (2%) on ’ the gross receipts derived from the business covered by the law granting the franchise: Provided, however, That radio and television broadcasting companies referred to-in this Section shall have an option to be registered as a value-added taxpayer and pay the tax du, thereon: Provided, further, That once the option is exercised, said option shall be irrevocable, shall file the return with, and pay the tax due thereon to the fer or his duly authorized representative, in accordance with the 28 of this Code, and the retum shall be subject to audit by the ‘any provision of any existing law to the contrary The grante¢ Commissioné provisions of Section 1 Bureau of Internal Revenue, notwithstanding. 373 Percentiye Tae ee ig also known as Franchise der this Section nd collectex Tax. A porebringe we o'3% shall be levied, san broadcasting respect to all “franchisos on radio anti preceding year does not companies” whose annual gross reer vision broadcasting companies exceed P10,000,000. Radio a agistered as a v; referred to in this section shall have an option 10 Pe oe, shall not taxpayer, provided, thal once the option is revoked. ter utilities at ranted to gas and wal a erst be lve, ‘assessed and collected on the 8 vered by the law granting the 1ss COVE e oe be subject to either 12%. value ase may be. A percentage on rate of two percent (2%) gross receipts derived from th franchise. Other franchise holders shi added tax or 3% other percentage tax, as the ¢ FSC uuu) PURE numa GRANTOR TYPE OF FRANCHISE BUSINESS TAX 3% OPT or 12% vat if vat reg. or if Radio(Telev Broadcasting Co.'s. | GR > POM for the preceding year"* Gas and water ulilties 2% OPT regardless of gross receipts Allother types of franchises peor onal Sec.116 All types of 12% vat OR 3% OPT under franchises Sec.116 if NV reg. & GRSP3M tadio and television broadcasting companies referred to in this Sectic registered as a Value-added taxpayer and pape alld ee ae ayer and pay the tax due thereon, provided, that once the option is FRANCHISE TAX FOR THE NATIONAL GRID CORPORATION RA. 9511 imposed a 3% franchise tax on all . “ Corporation fam is tansrisson operation, Pn eae by tte National Grd 4zmzzam

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