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    TAX Chapter 5 Reviewer - Summary Principles of Business Taxation TAX Chapter 5 Reviewer - Summary Principles of Business Taxation

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    Makoy Bixenman
    1. The document discusses the types of services that are specifically subject to percentage tax under Philippine law, including banks and other financial institutions, international carriers, common carriers, certain amusement places, brokers, franchise grantees, life insurance companies, telephone companies, and jai-alai and cockpit operators. 2. It provides the various tax rates applied to these different services, such as 5% tax on interest income from banks with maturities under 5 years. 3. Key terms discussed include domestic carriers, international carriers, primary and secondary offerings in IPOs, and the taxation of receipts from life insurance and professional boxing exhibitions.

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    TAX Chapter 5 Reviewer - Summary Principles of Business Taxation TAX Chapter 5 Reviewer - Summary Principles of Business Taxation

    Uploaded by

    Makoy Bixenman
    339 views5 pages
    1. The document discusses the types of services that are specifically subject to percentage tax under Philippine law, including banks and other financial institutions, international carriers, common carriers, certain amusement places, brokers, franchise grantees, life insurance companies, telephone companies, and jai-alai and cockpit operators. 2. It provides the various tax rates applied to these different services, such as 5% tax on interest income from banks with maturities under 5 years. 3. Key terms discussed include domestic carriers, international carriers, primary and secondary offerings in IPOs, and the taxation of receipts from life insurance and professional boxing exhibitions.

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    1. The document discusses the types of services that are specifically subject to percentage tax under Philippine law, including banks and other financial institutions, international carriers, common carriers, certain amusement places, brokers, franchise grantees, life insurance companies, telephone companies, and jai-alai and cockpit operators. 2. It provides the various tax rates applied to these different services, such as 5% tax on interest income from banks with maturities under 5 years. 3. Key terms discussed include domestic carriers, international carriers, primary and secondary offerings in IPOs, and the taxation of receipts from life insurance and professional boxing exhibitions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    339 views5 pages

    TAX Chapter 5 Reviewer - Summary Principles of Business Taxation TAX Chapter 5 Reviewer - Summary Principles of Business Taxation

    Uploaded by

    Makoy Bixenman
    1. The document discusses the types of services that are specifically subject to percentage tax under Philippine law, including banks and other financial institutions, international carriers, common carriers, certain amusement places, brokers, franchise grantees, life insurance companies, telephone companies, and jai-alai and cockpit operators. 2. It provides the various tax rates applied to these different services, such as 5% tax on interest income from banks with maturities under 5 years. 3. Key terms discussed include domestic carriers, international carriers, primary and secondary offerings in IPOs, and the taxation of receipts from life insurance and professional boxing exhibitions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 5

    lOMoARcPSD|6980432

    TAX Chapter 5 Reviewer - Summary Principles of Business


    Taxation
    Accountancy (Adamson University)

    StuDocu is not sponsored or endorsed by any college or university


    Downloaded by Mark Gelo Winchester (winchestermarkgelo@gmail.com)
    lOMoARcPSD|6980432

    SERVICES SPECIFICALLY SUBJECT TO PERCENTAGE TAX


    Important Terms:
    1. Bank and Non-bank financial intermediaries (Gross receipts tax) 1. Banks
    2. Non-Bank financial Intermediaries
    TAX RATE ON BANK AND QUASI-BANKS 3. Quasi-banking function

    1. Interest income, commissions and discount from lending activities


    and income from financial leasing, on the basis of remaining
    maturities of instrument from which the receipt are derived:
    a. Maturity period less than 5 years 5%
    b. Maturity period more than 5 years 1%
    2. Dividend and equity shares in the net income of subsidiaries 0%

    3. On royalties, rent of property, personal or real, profit on exchange 7%


    and all other items treated as gross income under section 32 of the
    NIRC
    4. On net trading gains within the taxable year on foreign currency, 7%
    debt securities, derivatives and other similar financial instrument

    TAX ON OTHER FINANCIAL INTERMEDIARIES W/OUT QUASI-BANKING

    1. Interest income, commissions and discount from lending activities


    and income from financial leasing, on the basis of remaining
    maturities of instrument from which the receipt are derived:
    a. Maturity period less than 5 years 5%
    b. Maturity period more than 5 years 1%
    2. From all other items treated as gross income under NIRC 5%
    Examples are: pawnshop and money changers

    2. International Carrier on their transport of cargoes, excess baggage and mails only
    (International Carrier Tax)

    Domestic Operation International Operation


    Outgoing Incoming
    Domestic Carrier 12% VAT 0% VAT Exempt
    International Carrier
    Passengers N/A Exempt Exempt
    Good, mails or N/A 3% OPT Exempt
    cargoes
    Important Terms:
    1. International carriers

    3. Common Carrier on their transport of passengers, by land and keepers of garage (Common
    Carrier Tax)

    Passengers Baggage/Mails/Cargoes
    By land 3% percentage tax Vatable
    By water/sea Vatable Vatable
    By air Vatable Vatable

    Downloaded by Mark Gelo Winchester (winchestermarkgelo@gmail.com)


    lOMoARcPSD|6980432

    4. Certain Amusement places (Amusement Tax)

    Places of boxing exhibitions 10%


    Places of professional basketball games 15%
    Cockpits, cabaret, day or night clubs 18%
    Jai-Alai and race tracks 30%

    5. Brokers in effecting sale of stocks through the Philippine Stock Exchange and Corporation or
    Shareholders of Initial Public Offering (Stock Transaction Tax)

    Listed stocks through PSE 60% of 1%


    Important Terms:
    1. Closely-held corporation
    IPO TAX TAX RATE 2. PRIMARY OFFERING
    Up to 25% 4% 3. SECONDARY OFFERING
    Over 25% but not over 33 1/3% 2%
    Over 33 1/3 % 1%

    PRIMARY OFFERING = primary shares / outstanding shares after IPO


    SECINDARY OFFERING = secondary shares / outstanding shares before IPO

    6. Certain Franchise Grantees (Franchise Tax)

    Radio or television broadcast whose gross annual not exceeding 10,000,000 3%


    Gas and water utilities 2%

    7. Life Insurance (Premium Tax) and Agents of Foreign Insurance

    Life insurance (Philippines) 2%


    Foreign life insurance 4%
    Insurance directly from abroad 5%

    8. Telephone companies on overseas communication (Overseas Communication Tax)

    Philippines – Philippines 12% VAT


    Philippines – Abroad 10%
    Abroad – Philippines 0% VAT

    9. Jai-Alai and Cockpits operators on winnings (Winnings Tax)

    Winnings in horse race or jai-alai (straight bets/wagers) 10%


    Winnings from double, forecast/quinella and trifecta bets 4%
    Owners of winning race horses 10%

    Downloaded by Mark Gelo Winchester (winchestermarkgelo@gmail.com)


    lOMoARcPSD|6980432

    ENUMERATION

    SCOPE OF PERCENTAGE TAX 1. International air carriers


    2. International shipping carriers
    1. Services specifically subject to
    percentage tax – specific % tax – various
    tax rates
    2. Sales of goods or other services not TYPES OF CARRIERS
    exempted – general % tax – 3% 1. Domestic carrier
    percentage tax 2. International carrier
    TYPES OF PERCENTAGE TAX EXEMPT RECEIPTS ON
    1. Specific percentage tax PROFESSIONAL BOXING
    2. General percentage tax 1. World and oriental championship
    SERVICES SPECIFICALLY SUBJECT TO 2. At least one of the contenders is a
    PERCENTAGE TAX Filipino citizen
    3. The promoter is a Filipino citizen or a
    1. Bank and Non-bank financial corporation 60% of which owned by
    intermediaries Filipino citizen
    2. International Carrier on their transport of
    cargoes, excess baggage and mails only VATABLE FRANCHISES
    3. Common Carrier on their transport of 1. Electricity
    passengers, by land and keepers of 2. Telecommunication
    garage 3. Transportation
    4. Certain Amusement places 4. Private franchises
    5. Brokers in effecting sale of stocks
    through the Philippine Stock Exchange TYPES OF INSURANCE BUSINESS
    and Corporation or Shareholders of
    1. Direct insurance
    Initial Public Offering
    2. Reinsurers
    6. Certain Franchise Grantees
    3. Retrocessionaires
    7. Life Insurance and Agents of Foreign
    Insurance TAXATION OF OTHER RECEIPTS OF
    8. Telephone companies on overseas LIFE INSURANCE
    communication
    9. Jai-Alai and Cockpits operators on 1. Renewal or re-insurance fee,
    winnings reinstatement fee and penalties
    2. Management fees, rental income, or
    COMON RULES FOR BANKS,QUASI- other income from unrelated services
    BANKS AND OTER FINANCIAL 3. Investment Income
    INSTITUTION
    EXEMPTIONS TO OVERSEAS
    1. Accounting rules COMMUNICATION TAX
    2. Finance lease and operating lease
    3. Pre-termination of instruments 1. Government
    2. Diplomatic services
    TYPES OF INTERNATIONAL CARRIER 3. International Organization

    Downloaded by Mark Gelo Winchester (winchestermarkgelo@gmail.com)


    lOMoARcPSD|6980432

    4. News services

    EXEMPTION FROM PERCENTAGE TAX

    1. VAT Taxpayers
    2. Self-employed or professionals who
    opted to the 8% income tax
    3. Cooperatives

    Downloaded by Mark Gelo Winchester (winchestermarkgelo@gmail.com)

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