OPT

• Other Percentage Tax


  Tax on persons exempt from VAT, Common Carrier's Tax, Tax on International Carriers, Franchise Tax, Overseas Communications Tax, Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions, Tax on Finance Companies, Tax on Life Insurance Premiums
• Section 116: Tax on Persons Exempt from VAT:

  
  

  Persons subject to 3% tax on quarterly gross sales/receipts


  • Engage in VATable sales/leases/services
  • Gross sales/receipts ≤ 3,000,000
  • Not VAT-registered
• Section 116: Tax on Persons Exempt from VAT:

  
  

  Effective July 1, 2020 to June 30, 2023


  Tax rate is 1%
• Section 116: Tax on Persons Exempt from VAT:

  
  

  Persons exempt from 3% tax

  • Self-employed individuals/professionals availing 8% tax
  • Cooperatives with accumulated reserves/net savings > 10,000,000
  • Corporate directors' fees, per diems, allowances
  • Marginal income earners with gross sales/receipts ≤ 100,000
  • VAT-registered persons
  • Non-VAT exempt persons with gross sales/receipts > 3,000,000
• Section 117: Common Carrier's Tax:

  
  

  Persons subject to 3% tax on quarterly gross sales/receipts from transport of passengers


  • Lessors of cars for rent/hire
  • Transportation contractors
  • Other domestic carriers by land for passenger transport
  • Keepers of garages
• Section 117: Common Carrier's Tax:

  
  

  Exempted persons

  • Banca owners
  • Owners of animal-drawn two-wheeled vehicles
• Section 118: % Tax on International Carriers (Foreign Carriers)

  
  

  (NRA-ETB) International air and shipping carriers doing business in the Philippines


  • No business tax on passenger
  • OPT on cargo
• Section 118: % Tax on International Carriers (Foreign Carriers)

  
  

  Off-line carriers


  Sell tickets covering off-line flights/voyages outside the Philippines not touching any port/point in the Philippines
• Section 118: % Tax on International Carriers (Foreign Carriers)

  
  

  Off-line carriers not considered engaged in business as international carrier in the Philippines, exempt from OPT under Section 118
• Section 119: Franchise Tax

  
  

  Radio/TV broadcasting companies with annual gross receipts ≤ ₱10,000,000 and not VAT-registered


  • 3% of gross receipts
• Section 119: Franchise Tax

  
  

  Gas and water utilities


  • 2% of gross receipts
• Section 120: Overseas Communications Tax

  
  

  Payor of the service


  The payee collects and remits the tax to BIR within 20 days after the end of each quarter
• Section 120: Overseas Communications Tax

  
  

  Overseas communications tax

  10% of the amount paid for the service
• Section 120: Overseas Communications Tax

  
  

  Exemptions from overseas communications tax

  • The Government
  • Embassies/consular offices of a Foreign Government
  • International organizations pursuant to international agreements
  • News services
• Section 121: Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions (“GRT”)

  
  

  Non-bank financial intermediaries performing quasi-banking functions

  • Persons/entities whose principal functions include lending, investing, or placement of funds or evidences of indebtedness or equity
  • Borrowing of funds from 20+ lenders through debt instruments other than deposits for own account, or through certificates of assignment/repurchase agreements for relending/purchasing receivables
• Section 121: Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions (“GRT”)

  
  

  Tax rates

  • 5% on interest, commissions, discounts from lending activities with maturity ≤ 5 years
  • 1% on interest, commissions, discounts from lending activities with maturity > 5 years
  • 0% on dividends, equity shares, net income of subsidiaries
  • 7% on royalties, rentals, profits from exchange, net trading gains
• Section 121: Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions (“GRT”)

  
  

  BSP is not a bank nor a non-bank financial intermediary, not subject to percentage tax but can be subject to VAT
• Section 122: Tax on Finance Companies

  
  

  Other non-bank financial intermediaries not performing quasi-banking functions

  • Includes pawnshops and non-stock savings and loan associations
• Section 123: Tax on Life Insurance Premiums (Premium Tax)

  
  

  Life insurance premium tax

  2% of gross premiums collected, including re-issuance fees, reinstatement fees, renewal fees, penalties, and premiums on health/accident insurance
• Exemptions from life insurance premium tax

  • Premiums received by purely cooperative companies/associations
  • Premiums refunded within 6 months
  • Premiums paid upon reinsurance
  • Premiums collected by foreign branches on non-resident insureds
• Persons subject to Premium Tax


  • Any person/entity offering life insurance in the Philippines, except purely cooperative companies or associations
• Premium Tax


  2% of gross premiums collected
• What is included in "gross premiums"

  • Re-issuance fees
  • Reinstatement fees
  • Renewal fees
  • Penalties paid to the insurance company in connection with the insurance policy
  • Premiums on health and accident insurance
• Section 124: Tax on Agents of Foreign Insurance Companies

  
  

  Persons subject to Tax on Agents of Foreign Insurance Companies

  • Every fire, marine, or miscellaneous insurance agent authorized under the Insurance Code to procure policies of insurance as he may have previously been legally authorized to transact, on risks located in the Philippines for companies not authorized to transact business in the Philippines
  • Owners of property who obtain insurance directly with foreign companies
• Tax on Agents of Foreign Insurance Companies

  • For fire, marine, or miscellaneous insurance agent - 4%
  • For owners of property who obtain insurance directly with foreign companies - 5%
• Section 125: Amusement Taxes

  
  

  Persons subject to Amusement Tax

  • Proprietor, lessee, or operator of cockpits
  • Cabarets
  • Night or day clubs
  • Boxing exhibitions
  • Professional basketball games
  • Jai-alai
  • Racetracks
• Amusement Tax Rates


  • Cockpits, Cabarets, Night or day clubs - 18%
  • Boxing exhibitions - 10%
  • Professional basketball games - 15%
  • Jai-alai and race tracks - 30%
• Section 125: Amusement Taxes

  
  

  Gross receipts include admission charges, rents, and income from television, radio, and motion picture rights
• If the proprietor, lessee, or operator of the amusement place also operates, at the same time within the premises, a bar or restaurant, the receipts of the bar or restaurant shall form part of gross receipts subject to the amusement tax
• If such bar or restaurant is operated by a third person, the gross receipts thereof shall be subject either to VAT or to the 3% OPT
• Amusement places include


  • Videoke bars
  • Karaoke bars
  • Karaoke televisions
  • Karaoke boxes
  • Music lounges
• Exemptions from Amusement Tax for Boxing Exhibitions

  • The world or oriental title is at stake
  • One of the contenders is a Filipino citizen
  • Promoted by a Filipino citizen, or by a corporation/association which is ≥ 60% owned by Filipinos
• Section 125-A: Gaming Tax of Offshore Gaming Licensees (“OGLs”)

  
  

  Persons subject to Gaming Tax of Offshore Gaming Licensees

  • Offshore gaming operators, whether organized abroad or in the Philippines, duly licensed and authorized to conduct offshore gaming operations, including the acceptance of bets from offshore customers
• Gaming Tax of Offshore Gaming Licensees

  • 5% of the entire gross gaming revenue or receipts, or the agreed pre-determined minimum monthly gaming revenue or receipts, whichever is higher
  • In lieu of all other direct and indirect internal revenue taxes and local taxes
• PAGCOR or any special economic zone, tourism zone, or freeport authority may impose regulatory fees which shall not cumulatively exceed 2% of the gross gaming revenue or receipts of all offshore gaming licensees, or a pre-determined minimum guaranteed fee, whichever is higher
• Gross gaming revenue or receipts

  Gross wages less payouts
• Non-gaming revenues of offshore gaming licensees shall be subject to 25% income tax and VAT or OPT
• Winnings Tax (Horse Races)


  • 10% of winnings or "dividends" for horse race winnings
  • 4% of winnings or "dividends" for double, forecast/quinella, and trifecta bets
  • 10% of the prizes for owners of winning race horses
• The tax shall be withheld by the operator, manager, or person in charge of the horse races before paying the dividends or prizes
• Section 127: Stock Transaction Tax

  
  

  Persons subject to Stock Transaction Tax

  • Seller or transferor of the shares of stock, whether individual (citizen or alien), corporation (domestic or foreign), or other taxpayer such as estates, trust funds, and pension funds