A Guide to Business Taxes

In the Philippines

By Jose Mari GimenezBUSLAW3 K32A Guide toBusiness Taxes

ObjectivesTo know what are the different business taxesTo know each of their specialtiesTo know the ratesTo know how it is used in business

Value-Added Tax (VAT)Any person who sells, barters or exchanges goods or properties in the course or trade or business shall be subject to VAT.it is a tax on consumption levied on the sale, barter, exchange or lease of goods or properties and services in the PhilippinesIt is an indirect tax, which may be shifted or passed on to the buyer.Tax Rates12%, if domestic sale;0%, if export sale.

Value-Added Tax (VAT)VAT can be found in everyday activities such as receipts and invoices from purchases and sales.

The Types Of VATInput tax is the VAT due on or paid by a VAT-registered on importation of goods or local purchase of goods, properties or services, including lease or use of property in the course of his trade or business.Output tax is the VAT due on the sale, lease or exchange of taxable goods or properties or services by any person registered or required to register under Section 236 of the Tax Code.

12% Tax Rate on VATThe right or privilege to use in the Philippines of any industrial, commercial or scientific equipment.The right or privilege to use motion picture films, tapes and discs.Real properties held primarily for sale to customers or held for lease in the ordinary course of trade or business.The right or privilege to use patent, copyright, design or model, plan, secret formula or process, goodwill, trademark, trade brand or other like property or right.

0% Tax Rate on VATExport sales, especially sale of raw materials and sale of gold

Services performed in the Philippines by VAT-registered personsSale or importation of agricultural and marine food productsImportation of household and personal items

VAT-ExemptedIndividuals pursuant to an employer-employee relationshipEducational servicesAgricultural contract growers milling for othersValue-Added Tax (VAT)Computation for VAT on sale of servicesOutput taxes (sellers VAT on sales)Less: Input taxes (sellers VAT paid on purchases)VAT payable of seller

Computation for VAT on sale of goodsOutput taxes (sellers VAT on sales)Less: Input taxes (sellers VAT paid on purchases)VAT payable of seller

Persons eligible for VATPersons required to register as VAT taxpayer but failed to register previously.Persons who engages in importation of goods and is engage in trade / business.Persons or entities who engages in business with actual gross sales or receipts exceeding P1,919,500.00.

10Other Percentage TaxBusiness who sell or lease goods, properties or services in the course of trade or business and are exempt from value-added tax (VAT) under Section 109 (w) of the National Internal Revenue Code, as amended, whose gross annual sales and/or receipts do not exceed P 1,919,500 and who are not VAT-registeredOther Percentage Tax3% percentage taxCommon carriers tax on domestic carriersCommon carriers tax on international carriersFranchise taxOverseas communications taxTax on banks and non-bank financial intermediaries performing quasi-banking functionsAmusement taxTax on winningsStock transaction tax

Excise TaxA tax on the production, sale or consumption of a commodity in a country.Applicable to On goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition.Applicable for goods imported.

Excise TaxSpecific Tax Ad Valorem Tax the excise tax imposed which is based on weight or volume capacity or any other physical unit of measurement

the excise tax which is based on selling price or other specified value of the goods/articles