TAX Chapter 5 Reviewer - Summary Principles of Business Taxation PDF

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Summary

SERVICES SPECIFICALLY SUBJECT TO PERCENTAGE TAX Bank and Non-bank financial intermediaries (Gross receipts tax) TAX RATE ON BANK AND QUASI-BANKS Interest income, commissions and discount from lending activities and income from financial leasing, on the basis of remaining maturities of instrument fro...

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SERVICES SPECIFICALLY SUBJECT TO PERCENTAGE TAX 1. Bank and Non-bank financial intermediaries (Gross receipts tax) TAX RATE ON BANK AND QUASI-BANKS

Important Terms: 1. Banks 2. Non-Bank financial Intermediaries 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 b. Maturity period more than 5 years

5% 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 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, debt securities, derivatives and other similar financial instrument

7%

7%

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 b. Maturity period more than 5 years

5% 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 Domestic Carrier International Carrier Passengers Good, mails or cargoes

12% VAT

International Operation Outgoing Incoming 0% VAT Exempt

N/A N/A

Exempt 3% OPT

Exempt Exempt Important Terms:

1. International carriers

3. Common Carrier on their transport of passengers, by land and keepers of garage (Common Carrier Tax) By land By water/sea By air

Passengers 3% percentage tax Vatable Vatable

Baggage/Mails/Cargoes Vatable Vatable Vatable

4. Certain Amusement places (Amusement Tax)

Places of boxing exhibitions Places of professional basketball games Cockpits, cabaret, day or night clubs Jai-Alai and race tracks

10% 15% 18% 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

IPO TAX Up to 25% Over 25% but not over 33 1/3% Over 33 1/3 %

60% of 1% Important Terms: 1. Closely-held corporation 2. PRIMARY OFFERING

TAX RATE 4% 2% 1%

3. SECONDARY OFFERING

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 Gas and water utilities

3% 2%

7. Life Insurance (Premium Tax) and Agents of Foreign Insurance Life insurance (Philippines) Foreign life insurance Insurance directly from abroad

2% 4% 5%

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

12% VAT 10% 0% VAT

9. Jai-Alai and Cockpits operators on winnings (Winnings Tax) Winnings in horse race or jai-alai (straight bets/wagers) Winnings from double, forecast/quinella and trifecta bets Owners of winning race horses

10% 4% 10%...