A list of important things you need to know about Percentage Tax
- Percentage Tax is a business tax regulated in our country
- Taxpayers who are Non-VAT with annual revenues less than PHP 3M
- Filing of 2551Q is on or before the 25th day after the last quarter
- Failure to pay BIR form 2551Q, individual will incur 12% interest based on their tax payables
Percentage Tax is a business tax that is regulated in the Philippines which is imposed on individuals or businesses that sell/lease goods and services with annual sales not exceeding PHP 3 Million and is not VAT registered.
Those who need to file percentage tax are any of the following individuals/business listed below:
- Individuals who are not VAT-registered with annual gross sales/receipts not more than Php 3,000,000
- Individuals who lease residential units where monthly rentals exceed Php 15,000 but the aggregate of rentals is not more than Php 3,000,000
- Individuals engaged in the following industries:
- Franchise grantees of gas/water utilities, radio/TV broadcasting with revenue, not more than Php 10,000,000 Million and did not opt to register as VAT
- Cars for rent and hire
- Domestic and international air/shipping carriers
- Banks and Non-Bank intermediaries
- Individuals, company, or corporations doing life insurance
- Fire, marine, or agents of foreign insurance companies
- Operators and/or lessee of cockpits, clubs, exhibitions, pro-basketball games, racetracks, Jai-Alai, music lounges under the RMC No. 18-2010
Quarterly Percentage Tax Rates Table
| Coverage | Taxable Base | Tax Rate |
| Non-VAT registered persons under Section 109 (BB) | Gross sales or receipts | 3% |
| Domestic carriers and keepers of garages | Gross receipts | 3% |
| International air/shipping carriers doing business in the Philippines | Gross receipts on the transport of cargo from the Philippines to a foreign country | 3% |
| Franchise grantees: Gas and water utilities Radio and television broadcasting companies whose annual gross receipts of the preceding year do not exceed Php10,000,000 and did not opt to register as VAT taxpayer | Gross receiptsGross receipts | 2% 3% |
| Overseas dispatch, message or conversation originating from the Philippines | Amount paid for the service | 10% |
| Banks and non-bank financial intermediaries performing quasi-banking functions | Interest, commissions, and discounts from lending activities as well as income from financial leasing, on the basis of remaining maturities of instruments from which receipts are derived: | |
| • If the maturity period is five years or less | 5% | |
| • If the maturity period is more than five years | 1% | |
| Dividends and equity shares and net income of subsidiaries | 0% | |
| Royalties, rentals of property, real or personal, profits from the exchange and all other items treated as gross income under Sec. 32 of the Tax Code, as amended | 7% | |
| Net trading gains within the taxable year of foreign currency, debt securities, derivatives, and other similar financial instruments | 7% | |
| Other non-bank financial intermediaries | Interest, commissions, discounts and all other items treated as gross income under the Tax Code, as amended | 5% |
| Interest, commissions, discounts from lending activities, as well as income from financial leasing on the basis of remaining maturities of instruments from which such receipts are derived: | ||
| • If the maturity period is five years or less | 5% | |
| • If the maturity period is more than five years | 1% | |
| Life Insurance Company/Agent/Corporation (except purely cooperative companies or associations) | Total premiums collected | 2% |
| Agents of foreign insurance companies (except reinsurance premium): | ||
| Insurance agents authorized under the Insurance Code to procure policies of insurance for companies not authorized to transact business in the Philippines | Total premiums collected | 4% |
| Owners of property obtaining insurance directly with foreign insurance companies | Total premiums paid | 5% |
| Proprietor, lessee or operator of the following: | ||
| Cockpits | Gross receipts | 18% |
| Cabarets, Night or Day Clubs, videoke bars, karaoke bars, karaoke televisions, karaoke boxes, and music lounges | Gross receipts | 18% |
| Boxing exhibitions (except when the World or Oriental Championship is at stake in any division, provided further that at least one of the contenders for World Championship is a citizen of the Philippines and said exhibitions are promoted by a citizen/s of the Philippines or by a corporation/ association at least 60% of the capital of which is owned by said citizen/s) | Gross receipts | 10% |
| Professional basketball games (in lieu of all other percentage taxes of whatever nature and description) | Gross receipts | 15% |
| Jai-alai and race track | Gross receipts | 30% |
| Winnings on horse races | · Winnings or ‘dividends’ | 10% |
| · Winnings from double forecast/quinella and trifecta bets | 4% | |
| · Prizes of owners of winning racehorses | 10% | |
(Source of Table: Percentage Tax BIR https://tini.to/ia3 )
Transactions/Industries Included
The Bureau of Internal Revenue (BIR) has also provided a detailed list of transactions and industries that taxpayers should have been engaging with in order to qualify for filing of Percentage Tax. See the full list here.
Filing of Percentage Taxes
In accordance with BIR’s tax advisory, percentage taxes shall now be processed quarterly using BIR Form 2551Q (Quarterly Percentage Tax Return). An updated version of the form also comes with additional ATCs (Alphanumeric Tax Code) such as PT010, PT040, and many others, in relation to the provisions of the TRAIN Law (Tax Reform for Acceleration and Inclusion).
When to File BIR Form 2551Q?
As per tax deadlines, Quarterly Percentage Taxes shall be filed on or before the 25th day after the taxable quarter.
Penalties for the failure of filing BIR form 2551Q?
The individual will incur interest of 12%, surcharge, compromised penalty in these cases:
- Failure to file and pay quarterly percentage tax return on or before the deadline
- Filed a return in the wrong venue (RDO Offices)
- Failure to pay the full or part of the amount of tax due
- Failure to pay the deficiency tax
- Filed a false/fraudulent tax return
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