Taxation Notes

INCOME TAXATION
Tax Rate
A. For Individuals Earning Purely Compensation Income and Individuals Engaged in Business and Practice of Profession
Amount of Net Taxable Income Rate

Over But Not Over
P10,000 5%
P10,000 P30,000 P500 + 10% of the Excess over P10,000
P30,000 P70,000 P2,500 + 15% of the Excess over P30,000
P500,000 P125,000 + 32% of the Excess over P500,000 in 2000 and onward
Note: When the tax due exceeds P2,000.00, the taxpayer may elect to pay in two equal instalments, the first instalment to
be paid at the time the return is filed and the second instalment on or before July 15 of the same year with the Authorized
Agent Bank (AAB) within the jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered.
Tax Rate Taxable Base

1. Domestic Corporations:
a. In General 30% (effective Jan. 1, Net taxable income from all sources
2009)
b. Minimum Corporate Income Tax* 2% Gross Income
c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable Income
2. Proprietary Educational Institution 10% Net taxable income provided that the gross
income from unrelated trade, business or other
activity does not exceed 50% of the total gross
income
3. Non-stock, Non-profit Hospitals 10% Net taxable income provided that the gross
income from unrelated trade, business or other
activity does not exceed 50% of the total gross
income
4. GOCC, Agencies & Instrumentalities
a. In General 30% Net taxable income from all sources
5. National Gov't. & LGUs
6. Taxable Partnerships
7. Exempt Corporation
a. On Exempt Activities 0%
b. On Taxable Activities 30% Net taxable income from all sources
8. General Professional Partnerships 0%
9. Corporation covered by Special Laws Rate specified under
the respective special
laws
10. International Carriers 2.5% Gross Philippine Billings
11. Regional Operating Head 10% Taxable Income
12. Offshore Banking Units (OBUs) 10% Gross Taxable Income On Foreign Currency
Transaction
30% On Taxable Income other than Foreign
Currency Transaction
13. Foreign Currency Deposit Units (FCDU) 10% Gross Taxable Income On Foreign Currency
Transaction
30% On Taxable Income other than Foreign
Currency Transaction
*Beginning on the 4th year immediately following the year in which such corporation commenced its business operations,
when the minimum corporate income tax is greater than the tax computed using the normal income tax.
Passive Income
1. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Royalties (on books as well as literary & musical composition) 10%
- In general 20%
3. Prizes (P10,000 or less ) 5%
- In excess of P10,000 20%
4. Winnings (except from PCSO and lotto) 20%
5. Interest Income of Foreign Currency Deposit 7.5%
6. Cash and Property Dividends
- To individuals from Domestic Corporations 10 %
- To Domestic Corporations from Another Domestic Corporations 0%
7. On capital gains presumed to have been realized from sale, exchange or other disposition of
6%
real property (capital asset)
8. On capital gains for shares of stock not traded in the stock exchange
- Not over P100,000 5%
- Any amount in excess of P100,000 10%
9. Interest Income from long-term deposit or investment in the form of savings, common or
Exempt
individual trust funds, deposit substitutes, investment management accounts and other
investments evidenced by certificates
Upon pretermination before the fifth year , there should be imposed on the entire income from
the proceeds of the long-term deposit based on the remaining maturity thereof:
Holding Period
- Four (4) years to less than five (5) years 5%
- Three (3) years to less than four (4) years 12%
- Less than three (3) years 20%
B. For Non-Resident Aliens Engaged in Trade or Business
1. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Interest Income from long-term deposit or investment in the form of savings, common or
individual trust funds, deposit substitutes, investment management accounts and other
investments evidenced by certificatesUpon pretermination before the fifth year, there should be Exempt
imposed on the entire income from the proceeds of the long-term deposit based on the remaining
maturity thereof:Holding Period:
-Four (4) years to less than five (5) years 5%
-Three (3) years to less than four (4) years 12%
-Less than three (3) years 20%
3. On capital gains presumed to have been realized from the sale, exchange or other disposition
6%
of real property
4. On capital gains for shares of stock not traded in the Stock Exchange
- Not over P100,000 5%
C) For Non-Resident Aliens Not Engaged in Trade or Business
1. On the gross amount of income derived from all sources within the Philippines 25%
2. On capital gains presumed to have been realized from the exchange or other disposition of real
6%
property located in the Phils.
3. On capital gains for shares of stock not traded in the Stock Exchange
- Not Over P100,000 5%
D) On the gross income in the Philippines of Aliens Employed by Regional Headquarters (RHQ) or Area Headquarters
and Regional Operating Headquarters (ROH), Offshore Banking Units (OBUs), Petroleum Service Contractor and
Subcontractor
On the gross income in the Philippines of Aliens Employed by Regional Headquarters (RHQ) or 15%
Area Headquarters and Regional Operating Headquarters (ROH), Offshore Banking Units
(OBUs), Petroleum Service Contractor and Subcontractor
E) General Professional Partnerships
General Professional Partnerships 0%

F) Domestic Corporations
1) a. In General – on net taxable income 30%

b. Minimum Corporate Income Tax – on gross income 2%
c. Improperly Accumulated Earnings – on improperly accumulated taxable income 10%
2) Proprietary Educational Institution and Non-profit Hospitals 10%
- In general (on net taxable income) 10%
- If the gross income from unrelated trade, business or other activity exceeds 50% of the total
30%
gross income from all sources
4) GOCC, Agencies & Instrumentalities
a. In General - on net taxable income 30%
5) Taxable Partnerships
a. In General – on net taxable income 30%
6) Exempt Corporation
a. On Exempt Activities 0%
b. On Taxable Activities 30%
8) Corporation covered by Special Laws Rate specified under
laws
G) Resident Foreign Corporation
1) a. In General – on net taxable income 30%

2) International Carriers – on gross Philippine billings 2.50%
3) Regional Operating Headquarters on gross income 10%
4) Corporation Covered by Special Laws Rate specified under
laws
5) Offshore Banking Units (OBUs) on gross income 10%
6) Foreign Currency Deposit Units (FCDU) on gross income 10%
Frequently Asked Questions
1) What is income?
Income means all wealth, which flows into the taxpayer other than as a mere return of capital.
2) What is Taxable Income?
Taxable income means the pertinent items of gross income specified in the Tax Code as amended, less the deductions
and/or personal and additional exemptions, if any, authorized for such types of income, by the Tax Code or other special
laws.
3) What is Gross Income?
Gross income means all income derived from whatever source.
4) What comprises gross income?
Gross income includes, but is not limited to the following:

 Compensation for services, in whatever form paid, including but not limited to fees, salaries, wages,
commissions and similar item
 Gross income derived from the conduct of trade or business or the exercise of profession
 Gains derived from dealings in property
 Interest
 Rents
 Royalties
 Dividends
 Annuities
 Prizes and winnings
 Pensions
 Partner's distributive share from the net income of the general professional partnerships
5) What are some of the exclusions from gross income?
o
 Life insurance
 Amount received by insured as return of premium
 Gifts, bequests and devises
 Compensation for injuries or sickness
 Income exempt under treaty
 Retirement benefits, pensions, gratuities, etc.
 Miscellaneous items
o
o income derived by foreign government
o income derived by the government or its political subdivision
o prizes and awards in sport competition
o prizes and awards which met the conditions set in the Tax Code
o 13th month pay and other benefits
o GSIS, SSS, Medicare and other contributions
o gain from the sale of bonds, debentures or other certificate of indebtedness
o gain from redemption of shares in mutual fund
6) What are the allowable deductions from gross income?

Except for taxpayers earning compensation income arising from personal services rendered under an employer-employee
relationships where the only deduction provided that the gross family income does not exceed P250,000 per family is the
premium payment on health and/or hospitalization insurance, a taxpayer may opt to avail any of the following allowable
deductions from gross income:
a)Optional Standard Deduction - an amount not exceeding 40% of the net sales for individuals and gross income for
corporations; or
b) Itemized Deductions which include the following:

 Expenses
 Interest
 Taxes
 Losses
 Bad Debts
 Depreciation
 Depletion of Oil and Gas Wells and Mines
 Charitable Contributions and Other Contributions
 Research and Development
 Pension Trusts
In addition, individuals who are either earning compensation income, engaged in business or deriving income from the
practice of profession are entitled to personal and additional exemptions as follows:
Personal Exemptions:
For single individual or married individual judicially decreed as legally separated with no qualified
dependents………………………………………P 50,000.00
For head of family……………………………P 50,000.00
For each married individual *…………P 50,000.00
Note: In case of married individuals where only one of the spouses is deriving gross income, only such spouse will
be allowed to claim the personal exemption.
Additional Exemptions:

 For each qualified dependent, an P25,000 additional exemption can be claimed but only up to 4 qualified
dependents
The additional exemption can be claimed by the following:

 The husband who is deemed the head of the family unless he explicitly waives his right in favor of his
wife
 The spouse who has custody of the child or children in case of legally separated spouses. Provided, that
the total amount of additional exemptions that may be claimed by both shall not exceed the maximum
additional exemptions allowed by the Tax Code.
 The individuals considered as Head of the Family supporting a qualified dependent
The maximum amount of P 2,400 premium payments on health and/or hospitalization insurance can be claimed if:

 Family gross income yearly should not be more than P 250,000
 For married individuals, the spouse claiming the additional exemptions for the qualified dependents shall
be entitled to this deduction
7) Who are required to file the Income Tax returns?

 Individuals
 Resident citizens receiving income from sources within or outside the Philippines

o employees deriving purely compensation income from 2 or more employers, concurrently or
successively at anytime during the taxable year
o employees deriving purely compensation income regardless of the amount, whether from a single or
several employers during the calendar year, the income tax of which has not been withheld correctly
(i.e. tax due is not equal to the tax withheld) resulting to collectible or refundable return
o self-employed individuals receiving income from the conduct of trade or business and/or practice of
profession
o individuals deriving mixed income, i.e., compensation income and income from the conduct of trade
or business and/or practice of profession
o individuals deriving other non-business, non-professional related income in addition to
compensation income not otherwise subject to a final tax
o individuals receiving purely compensation income from a single employer, although the income of
which has been correctly withheld, but whose spouse is not entitled to substituted filing
o marginal income earners

 Non-resident citizens receiving income from sources within the Philippines
 Aliens, whether resident or not, receiving income from sources within the Philippines
 Corporations no matter how created or organized including partnerships

o domestic corporations receiving income from sources within and outside the Philippines
o foreign corporations receiving income from sources within the Philippines
o taxable partnerships

 Estates and trusts engaged in trade or business
8) Who are not required to file Income Tax returns?
a. An individual who is a minimum wage earner
b. An individual whose gross income does not exceed his total personal and additional exemptions
c. An individual whose compensation income derived from one employer does not exceed P 60,000 and the income tax on
which has been correctly withheld
d. An individual whose income has been subjected to final withholding tax (alien employee as well as Filipino employee
occupying the same position as that of the alien employee of regional headquarters and regional operating headquarters of
multinational companies, petroleum service contractors and sub-contractors and offshore-banking units, non-resident
aliens not engaged in trade or business)
e. Those who are qualified under “substituted filing”. However, substituted filing applies only if all of the following
requirements are present :

 the employee received purely compensation income (regardless of amount) during the taxable year
 the employee received the income from only one employer in the Philippines during the taxable year
 the amount of tax due from the employee at the end of the year equals the amount of tax withheld by the
employer
 the employee’s spouse also complies with all 3 conditions stated above
 the employer files the annual information return (BIR Form No. 1604-CF)
 the employer issues BIR Form No. 2316 (Oct 2002 ENCS version ) to each employee.
9) Who are exempt from Income Tax?
 Non-resident citizen who is:
a) A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact of his physical
presence abroad with a definite intention to reside therein
b) A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either as an
immigrant or for employment on a permanent basis
c) A citizen of the Philippines who works and derives income from abroad and whose employment thereat requires
him to be physically present abroad most of the time during the taxable year
d) A citizen who has been previously considered as a non-resident citizen and who arrives in the Philippines at any
time during the year to reside permanently in the Philippines will likewise be treated as a non-resident citizen during
the taxable year in which he arrives in the Philippines, with respect to his income derived from sources abroad until
the date of his arrival in the Philippines.
 Overseas Filipino Worker, including overseas seaman
An individual citizen of the Philippines who is working and deriving income from abroad as an overseas Filipino
worker is taxable only on income from sources within the Philippines; provided, that a seaman who is a citizen of the
Philippines and who receives compensation for services rendered abroad as a member of the complement of a vessel
engaged exclusively in international trade will be treated as an overseas Filipino worker.
NOTE: A Filipino employed as Philippine Embassy/Consulate service personnel of the Philippine

Embassy/consulate is not treated as a non-resident citizen, hence his income is taxable.
10) What are the procedures in filing Income Tax returns (ITRs)?
 For “with payment” ITRs (BIR Form Nos. 1700 / 1701 / 1701Q / 1702 / 1702Q / 1704)
File the return in triplicate (two copies for the BIR and one copy for the taxpayer) with the Authorized Agent Bank
(AAB) of the place where taxpayer is registered or required to be registered. In places where there are no AABs, the
return will be filed directly with the Revenue Collection Officer or duly Authorized Treasurer of the city or
municipality in which such person has his legal residence or principal place of business in the Philippines, or if there
is none, filing of the return will be at the Office of the Commissioner.
 For “no payment” ITRs -- refundable, break-even, exempt and no operation/transaction, including returns to be
paid on 2nd installment and returns paid through a Tax Debit Memo(TDM)
File the return with the concerned Revenue District Office (RDO) where the taxpayer is registered. However, "no
payment" returns filed late shall be accepted by the RDO but instead shall be filed with an Authorized Agent Bank
(AAB) or Collection Officer/Deputized Municipal Treasurer (in places where there are no AABs), for payment of
necessary penalties.
11) How is Income Tax payable of individuals (resident citizens and non-resident citizens)computed?
Gross Income P ___________

Less: Allowable Deductions (Itemized or Optional) ___________
Net Income P ___________
Less: Personal & Additional Exemptions ___________
Net Taxable Income P ___________
Multiply by Tax Rate (5 to 32%) ____________
Income Tax Due: Tax withheld (per BIR From 2316/2304) P ___________
Income tax payable P____________
12) How is Income Tax paid?
 Through withholding
o
o Generally 10% or 15% if the gross annual business or professional income exceeds P720,000 per
year
o 20% - Fees paid to directors who are not employees and 20% of professional fees paid to non-
individuals
o Other withholding tax rates

 Pay the balance as you file the tax return, computed as follows:
Income Tax Due P ___________

Less: Withholding Tax ___________
Net Income Tax Due P ___________
13) Is the Minimum Corporate Income Tax (MCIT) an addition to the regular or normal income tax?
No, the MCIT is not an additional tax. An MCIT of 2% of the gross income as of the end of taxable year (whether
calendar or fiscal year, depending on the accounting period employed) is imposed on a corporation taxable under Title II
of the Tax Code, as amended, beginning on the 4th taxable year immediately following the taxable year in which such
corporation commenced its business operations when the MCIT is greater than the regular income tax. The MCIT is
compared with the regular income tax, which is due from a corporation. If the regular income is higher than the MCIT,
then the corporation does not pay the MCIT but the amount of the regular income tax.
Notwithstanding the above provision, however, the computation and the payment of MCIT, shall likewise apply at the
time of filing the quarterly corporate income tax as prescribed under Section 75 and Section 77 of the Tax Code, as
amended. Thus, in the computation of the tax due for the taxable quarter, if the computed quarterly MCIT is higher than
that quarterly normal income tax, the tax due to be paid for such taxable quarter at the time of filing the quarterly income
tax return shall be the MCIT which is two percent (2%) of the gross income as of the end of the taxable quarter. In the
payment of said quarterly MCIT, excess MCIT from the previous taxable year/s shall not be allowed to be
credited. Expanded withholding tax, quarterly corporate income tax payments under the normal income tax, and the
MCIT paid in the previous taxable quarter/s are allowed to be applied against the quarterly MCIT due.
14) Who are covered by MCIT?
The MCIT covers domestic and resident foreign corporations which are subject to the regular income tax. The term
“regular income tax” refers to the regular income tax rates under the Tax Code. Thus, corporations which are subject to a
special corporate tax system do not fall within the coverage of the MCIT.
For corporations whose operations or activities are partly covered by the regular income tax and partly covered by the
preferential rate under special law, the MCIT shall apply on operations by the regular income tax rate. Newly established
corporations or firms which are on their first 3 years of operations are not covered by the MCIT.
15) When does a corporation start to be covered by the MCIT?
A corporation starts to be covered by the MCIT on the 4th year of its business operations. The period of reckoning which
is the start of its business operations is the year when the corporation was registered with the BIR. This rule will apply
regardless of whether the corporation is using the calendar year or fiscal year as its taxable year.
16) When is the MCIT reported and paid? Is it quarterly?
The MCIT is paid on an annual basis and quarterly basis. The rules are governed by Revenue Regulations No. 12-2007.
17) How is MCIT computed?
The MCIT is 2% of the gross income of the corporation at the end of the year.
“Gross income” means gross sales less sales returns, discounts and cost of goods sold. Passive income, which have been
subject to a final tax at source do not form part of gross income for purposes of the MCIT.
Cost of goods sold includes all business expenses directly incurred to produce the merchandise to bring them to their
present location and use.
For trading or merchandising concern, cost of goods sold means the invoice cost of goods sold, plus import duties, freight
in transporting the goods to the place where the goods are actually sold, including insurance while the goods are in transit.
For a manufacturing concern, cost of goods manufactured and sold means all costs of production of finished goods such
as raw materials used, direct labor and manufacturing overhead, freight cost, insurance premiums and other costs incurred
to bring the raw materials to the factory or warehouse.
For sale of services, gross income means gross receipts less sales returns, allowances, discounts and cost of services which
cover all direct costs and expenses necessarily incurred to provide the services required by the customers and clients
including:
o
 Salaries and employees benefits of personnel, consultants and specialists directly rendering the service;
 Cost of facilities directly utilized in providing the service such as depreciation or rental of equipment
used;
 Cost of supplies
Interest Expense is not included as part of cost of service, except in the case of banks and other financial institutions.
“Gross Receipts” means amounts actually or constructively received during the taxable year. However, for taxpayers
employing the accrual basis of accounting, it means amounts earned as gross income.
18) What is the carry forward provision under the MCIT?

Any excess of the MCIT over the normal income tax may be carried forward on an annual basis and be credited against
the normal income tax for 3 immediately succeeding taxable years.
19) How would the MCIT be recorded for accounting purposes?
Any amount paid as excess minimum corporate income tax should be recorded in the corporation’s books as an asset
under account title “Deferred charges-MCIT”
20) How long can we amend our income tax return?
There is no prescription period for amending the return. When the taxpayer has been issued a Letter of Authority, he can
no longer amend the return.
21) Can a benefactor of a senior citizen claim him/her as additional dependent in addition to his/her 3 qualified dependent
children at P 25,000 each?
No, pursuant to Revenue Regulations 2-94, the benefactor of a senior citizen cannot claim the additional exemption.
22) What is a tax treaty?
A tax treaty formally known as convention or agreement for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income (and on capital) could be defined in terms of its purpose. First, a tax treaty is
intended to promote international trade and investment in several ways, the most important of which is by allocating
taxing jurisdiction between the Contracting States so as to eliminate or mitigate double taxation of income. Second, a tax
treaty is intended to permit the Contracting States to better enforce their domestic laws so as to reduce tax evasion. These
purposes are in fact incorporated in the title and the preamble.
23) What are the effective Philippine tax treaties?
The Philippines has thirty-seven (37) effective tax treaties. The following tax treaties and their dates of effectivity as
as follows:
Effective Philippine Tax Treaties (as of June 2010)
Country Date of Effectivity Date and Venue of Signature

1. Australia January 1, 1980 May 11, 1979, Manila, Philippines
2. Austria January 1, 1983 April 4, 1981, Vienna, Austria
3. Bahrain January 1, 2004 November 7, 2001, Manila, Philippines
4. Bangladesh January 1, 2004 September 8, 1997, Manila, Philippines
5. Belgium January 1, 1981 October 2, 1976, Manila, Philippines
6. Brazil January 1, 1992 Sept. 29, 1983, Brasilia, Brazil
7. Canada January 1, 1977 March 11, 1976, Manila, Philippines
8. China January 1, 2002 November 18, 1999, Beijing, China
9. Czech January 1, 2004 November 13, 2000, Manila, Philippines
10. Denmark (Renegotiated) January 1, 1998 June 30, 1995, Copenhagen, Denmark
11. Finland January 1, 1982 October 13, 1978, Manila, Philippines
12. France January 1, 1978 January 9, 1976, Kingston, Jamaica
13. Germany January 1, 1985 July 22, 1983, Manila, Philippines
14. Hungary January 1, 1998 June 13, 1997, Budapest, Hungary
15. India January 1, 1995 February 12, 1990, Manila, Philippines
16. Indonesia January 1, 1983 June 18, 1981, Manila, Philippines
17. Israel January 1, 1997 June 9, 1992, Manila, Philippines
18. Italy January 1, 1990 December 5, 1980, Rome, Italy
19. Japan January 1, 1981 February 13, 1980, Tokyo, Japan
20. Korea January 1, 1987 February 21, 1984, Seoul, Korea
21. Malaysia January 1, 1985 April 27, 1982, Manila, Philippines
22. Netherlands January 1, 1992 March 9, 1989, Manila, Philippines
23. New Zealand January 1, 1981 April 29, 1980, Manila, Philippines
24. Norway January 1, 1998 July 9, 1987, Manila, Philippines
25. Pakistan January 1, 1979 February 22, 1980, Manila, Philippines
26. Poland January 1, 1998 September 9, 1992, Manila, Philippines
27. Romania January 1, 1998 May 18, 1994, Bucharest, Romania
28. Russia January 1, 1998 April 26, 1995, Manila, Philippines
29. Singapore January 1, 1977 August 1, 1977, Manila, Philippines
30. Spain January 1, 1994 March 14, 1989, Manila, Philippines
31. Sweden (Renegotiated) January 1, 2004 June 24, 1998, Manila, Philippines
32. Switzerland January 1, 2002 June 24, 1998, Manila, Philippines
33. Thailand January 1, 1983 July 14, 1982, Manila, Philippines
34. United Arab Emirates January 1, 2009 September 21, 2003, Dubai, UAE
35. United Kingdom of Great Britain and Northern Ireland January 1, 1979 June 10, 1976, London, United Kingdom
36. United States of America January 1, 1983 October 1, 1976, Manila, Philippines
37. Vietnam January 1, 2004 November 14, 2001, Manila, Philippines
24) What office can we inquire about the said tax treaties?
The International Tax Affairs Division (ITAD).
25) What taxes are covered by Philippine tax treaties?
Income taxes imposed by the domestic laws of the Contracting States, including substantially similar taxes that may be
imposed later, in addition to, or in place, are covered by the tax treaties. In the Philippines, this is generally limited to Title
II (Tax on Income) of the National Internal Revenue Code of 1997, as amended.
26) How is business income treated under our tax treaties?
The business profits of a resident of a Contracting State shall not be taxable in the Philippines unless that enterprise of a
resident of a Contracting State carries on business in the Philippines through a permanent establishment.
27) What is the concept of permanent establishment (PE) as used in tax treaties?
PE is defined as a fixed place of business through which the business of the enterprise is wholly or partly carried on. The
concept of permanent establishment is used to determine the rights of a Contracting State to tax the business profits of
enterprises of the other Contracting State. Under this concept, profits of an enterprise of a Contracting State are not
taxable by the other Contracting State, unless the enterprise carries on business through a permanent establishment
situated in the other Contracting State.
A list of places, circumstances, and activities which constitute a permanent establishment is provided under the different
tax treaties which the Philippines has with other countries.
28) What is the Most-Favored-Nation clause (MFN)?
The appearance of the MFN clause in the tax treaty means that a Contracting State will grant to a resident of the other
Contracting State the same lower rate of tax or exemption the former has granted to a resident of a third State.
29) What is the tax treatment on immovable property?
Income from an immovable property is taxable in the Contracting State where the property is situated. This term is
generally defined under the domestic laws of the Contracting States. However, this is further defined in the tax treaties.
30) How are capital gains taxed under our tax treaties?
Gains from the alienation of immovable property or movable property forming part of the business property of a
permanent establishment or pertaining to a fixed base are taxed in the Philippines if the immovable property or permanent
establishment or fixed base is located here.
Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or
other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of conditional
sale.
Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers evidencing the acceptance,
assignment, sale or transfer of an obligation, rights, or property incident thereto.
Donor's Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between two or more
persons who are living at the time of the transfer.
Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at
the time of death and on certain transfers which are made by law as equivalent to testamentary disposition.
Income Tax is a tax on all yearly profits arising from property, profession, trades or offices or as a tax on a person’s
income, emoluments, profits and the like.
Percentage Tax is a business tax imposed on persons or entities who sell or lease goods, properties or services in the
course of trade or business whose gross annual sales or receipts do not exceed P550,000 and are not VAT-registered.
Value-Added Tax is a business tax imposed and collected from the seller in the course of trade or business on every sale
of properties (real or personal) lease of goods or properties (real or personal) or vendors of services. It is an indirect tax,
thus, it can be passed on to the buyer.
Withholding Tax on Compensation is the tax withheld from individuals receiving purely compensation income.
Expanded Withholding Tax is a kind of withholding tax which is prescribed only for certain payors and is creditable
against the income tax due of the payee for the taxable quarter year.
Final Withholding Tax is a kind of withholding tax which is prescribed only for certain payors and is not creditable
against the income tax due of the payee for the taxable year. Income Tax withheld constitutes the full and final payment of
the Income Tax due from the payee on the said income.
Withholding Tax on Government Money Payments is the withholding tax withheld by government offices and
instrumentalities, including government-owned or -controlled corporations and local government units, before making any
payments to private individuals, corporations, partnerships and/or associations.
Estate Tax
Description
Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at
the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition. It is not a tax
on property. It is a tax imposed on the privilege of transmitting property upon the death of the owner. The Estate Tax is
based on the laws in force at the time of death notwithstanding the postponement of the actual possession or enjoyment of
the estate by the beneficiary.
Tax Rates
Effective January 1, 1998 up to Present
If the Net Estate is
Over But not Over The Tax Shall be Plus Of the Excess Over
P 200,000.00 Exempt
P 200,000.00 500,000.00 0 5% P 200,000.00
500,000.00 2,000,000.00 P 15,000.00 8% 500,000.00
2,000,000.00 5,000,000.00 135,000.00 11 % 2,000,000.00
5,000,000.00 10,000,000.00 465,000.00 15 % 5,000,000.00
10,000,000.00 1,215,000.00 20 % 10,000,000.00
Effective July 28, 1992 up to December 31, 1997 (Section 77 of the NIRC, as amended (Republic Act No. 7499)
P 200,000.00 Exempt
P 200,000.00 500,000.00 5% P 200,000.00
500,000.00 2,000,000.00 P 15,000.00 8% 500,000.00
2,000,000.00 5,000,000.00 135,000.00 12 % 2,000,000.00
5,000,000.00 10,000,000.00 495,000.00 21% 5,000,000.00
10,000,000.00 1,545,000.00 35 % 10,000,000.00
Effective January 1, 1973 to July 27, 1992 (Section 85 of the NIRC, as amended (Presidential Decree No. 69)
P 10,000.00 Exempt - -
P 10,000.00 50,000.00 3% - P 10,000.00
50,000.00 75,000.00 P 1,200.00 4% 50,000.00
75,000.00 100,000.00 2,200.00 5% 75,000.00
100,000.00 150,000.00 3,450.00 10% 100,000.00
150,000.00 200,000.00 8,450.00 15 % 150,000.00
200,000.00 300,000.00 15,950.00 20% 200,000.00
300,000.00 400,000.00 35,950.00 25% 300,000.00
400,000.00 500,000.00 60,950.00 30% 400,000.00
500,000.00 625,000.00 90,950.00 35% 500,000.00
625,000.00 750,000.00 134,700.00 40% 625,000.00
750,000.00 875,000.00 184,700.00 45% 750,000.00
875,000.00 1,000,000.00 240,950.00 50% 875,000.00
1,000,000.00 2,000,000.00 303,450.00 53% 1,000,000.00
2,000,000.00 3,000,000.00 833,450.00 56% 2,000,000.00
3,000,000.00 - 1,393,450.00 60% 3,000,000.00
Effective September 15, 1950 to December 31, 1972 (Section 85 of the NIRC, as amended (Republic Act No. 579)
Estate and Inheritance Tax
Over But not Over ESTATE INHERITANCE

0 5,000.00 Exempt Exempt
5,000.00 12,000.00 1.0% 2%
12,000.00 30,000.00 2.0% 4%
30,000.00 50,000.00 2.5% 6%
50,000.00 70,000.00 3.0% 8%
70,000.00 100,000.00 5.0% 12%
100,000.00 150,000.00 7.0% 14%
150,000.00 250,000.00 9.0% 16%
250,000.00 500,000.00 11.0% 18%
500,000.00 1,000,000.00 13% 20%
1,000,000.00 15% 22%
Effective July 1, 1939 to September 14, 1950 (Section 85 of the NIRC, as amended (Commonwealth Act No. 466)
Estate and Inheritance Tax
Over But not Over ESTATE INHERITANCE

0 3000.00 Exempt 1.0%
3,000.00 10,000.00 1.0%
10,000.00 30,000.00 1.5% 2.0%
30,000.00 50,000.00 2.0% 3.0%
50,000.00 80,000.00 2.5% 4.0%
80,000.00 110,000.00 3.0% 5.0%
110,000.00 150,000.00 3.5% 6.0%
150,000.00 190,000.00 4.0% 7.0%
190,000.00 240,000.00 4.5% 8.0%
240,000.00 290,000.00 5.0% 9.0%
290,000.00 350,000.00 5.5% 10.0%
350,000.00 420,000.00 6.0% 11.0%
420,000.00 500,000.00 6.5% 12.0%
500,000.00 600,000.00 7.0% 13.0%
600,000.00 720,000.00 7.5% 14.0%
720,000.00 850,000.00 8.0% 15.0%
850,000.00 1,000,000.00 8.5% 16.0%
1,000,000.00 1,200,000.00 9.0% 17.0%
1,200,000.00 1,500,000.00 9.5% 17.0%
1,500,000.00 10.0% 17.0%
Procedures
The heirs/authorized representative/administrator/executor shall file the estate tax return (BIR Form 1801) and pay the
corresponding estate tax with the Authorized Agent Bank (AAB), Revenue Collection Officer (RCO) or duly authorized
Treasurer of the city or municipality in the Revenue District Office having jurisdiction over the place of domicile of the
decedent at the time of his death, pursuant to Section 90(D) of the Tax Code, as amended.
In case of a non-resident decedent, with executor or administrator in the Philippines, the estate tax return shall be filed
with the AAB of the RDO where such executor/administrator is registered or is domiciled, if not yet registered with the
BIR.
For non-resident decedent with no executor or administrator in the Philippines, the estate tax return shall be filed with the
AAB under the jurisdiction of RDO No. 39 South Quezon City.
The heir/authorized representative/administrator/executor shall submit all the applicable documentary requirements as
prescribed in Annexes A-6 and A-6.1 of Revenue Memorandum Order (RMO) No. 15-2003 and proof of payment to the
RDO having jurisdiction over the place of residence of the decedent or the RDO where the executor or administrator is
registered, or RDO No. 39 – South, Quezon City, whichever is applicable. (part II, par.(4)of RMC No. 34-2013)
Payment of Estate Tax by installment - In case the available cash of the estate is not sufficient to pay its total estate tax
liability, the estate may be allowed to pay the tax by installment and a clearance shall be released only with respect to the
property, the corresponding/computed tax on which has been paid. (Section 9(F) of RR 2-2003)
One-Time Transaction (ONETT) taxpayers who are classified as real estate dealers/developers; those who are considered
as habitually engaged in the sale of real property and regular taxpayers already covered by eBlRForms. Thus, taxpayers
who are filing BIR Form No. 1706, 1707, 1800, 1801 and 2000-OT (for BIR Form No. 1706 only) are excluded in the
mandatory coverage from using the eBIRForms (Section 4 (3) of Revenue Regulation No. 9-2016)
Please note that the time of payment will vary depending on the law applicable at the time of the decedent’s death.
Deadlines
File the return within six (6) months from decedent's death. However, the Commissioner may, in meritorious cases, grant
extension not exceeding thirty (30) days.
The Estate Tax imposed shall be paid at the time the return is filed by the executor or administrator or the heirs. However,
when the Commissioner finds that payment on the due date of the Estate Tax or of any part thereof would impose undue
hardship upon the estate or any of the heirs, he may extend the time for payment of such tax or any part thereof not to
exceed five (5) years, in case the estate is settled through the courts or two (2) years in case the estate is settled extra-
judicially.
In all cases of transfers subject to tax, or where, though exempt from tax, the gross value of the estate exceeds Twenty
Thousand Pesos (P 20,000), Section 89 of the National Internal Revenue Code of 1997 (Tax Code), as amended, provides
that the executor, administrator or any of the legal heirs, shall send a written notice of death to the Commissioner within
two (2) months after the decedent’s death or within a like period after an executor or administrator qualify as such. (part
II, par.(1)of RMC No. 34-2013)
Please note that the time of filing will vary depending on the law applicable at the time of the decedent’s death.
Extension of Time of Filing:
When the Commissioner finds that the payment of the estate tax or of any part thereof would imposed undue hardship
upon the estate or any of the heirs, he may extend the time for payment of such tax or any part thereof not to exceed five
(5) years in case the estate is settled through the courts, or two (2) years in case it settled extra-judicially.
Where the request for extension is by reason of negligence, intentional disregard of rules and regulations, or fraud on the
part of the taxpayer, no extension will be granted by the Commissioner.
If an extension is granted, the Commissioner or his duly authorized representative may require the executor, or
administrator, or beneficiary, as the case may be, to furnish a bond in such amount, not exceeding double the amount, not
exceeding double the amount of tax and with such sureties as the Commissioner deems necessary, conditioned upon the
payment of the said tax in accordance in the terms of extension.
The request for extension shall be filed with the Revenue District Officer (RDO) where the estate is required to secure its
TIN and file the estate tax return. The application shall be approved by the Commissioner or his duly authorized
representative.
1. Who are required to file the Estate Tax return?
a) The executor or administrator or any of the legal heirs of the decedent or non-resident of the Philippines under any of
the following situation:
- In all cases of transfer subject to Estate Tax;
- Where though exempt from Estate Tax, the gross value of the estate exceeds two hundred thousand P 200,000.00;
and
- Where regardless of the gross value, the estate consists of registered or registrable property such as real property,
motor vehicle, share of stocks or other similar property for which a clearance from the Bureau of Internal Revenue
(BIR) is required as a prerequisite for the transfer of ownership thereof in the name of the transferee. (part II
par.(1.#3) of RMC No. 34-2013)
b) Where there is no executor or administrator appointed, qualified and acting within the Philippines, then any person in
actual or constructive possession of any property of the decedent must file the return.
c) The Estate Tax imposed under the Tax Code shall be paid by the executor or administrator before the delivery of the
distributive share in the inheritance to any heir or beneficiary. Where there are two or more executors or administrators,
all of them are severally liable for the payment of the tax. The estate tax clearance issued by the Commissioner or the
Revenue District Officer (RDO) having jurisdiction over the estate, will serve as the authority to distribute the
remaining/distributable properties/share in the inheritance to the heir or beneficiary.
d) The executor or administrator of an estate has the primary obligation to pay the estate tax but the heir or beneficiary has
subsidiary liability for the payment of that portion of the estate which his distributive share bears to the value of the total
net estate. The extent of his liability, however, shall in no case exceed the value of his share in the inheritance.
2. What are included in gross estate?
 For resident alien decedents/citizens:
a) Real or immovable property, wherever located
b) Tangible personal property, wherever located
c) Intangible personal property, wherever located
 For non-resident decedent/non-citizens:
a) Real or immovable property located in the Philippines
b) Tangible personal property located in the Philippines
c) Intangible personal property - with a situs in the Philippines such as:
- Franchise which must be exercised in the Philippines

- Shares, obligations or bonds issued by corporations organized or constituted in the Philippines
- Shares, obligations or bonds issued by a foreign corporation 85% of the business of which is located in the
Philippines
- Shares, obligations or bonds issued by a foreign corporation if such shares, obligations or bonds have acquired
a business situs in the Philippines ( i. e. they are used in the furtherance of its business in the Philippines)
- Shares, rights in any partnership, business or industry established in the Philippines
3. What are excluded from gross estate?
 GSIS proceeds/ benefits

 Accruals from SSS
 Proceeds of life insurance where the beneficiary is irrevocably appointed
 Proceeds of life insurance under a group insurance taken by employer (not taken out upon his life)
 War damage payments
 Transfer by way of bona fide sales
 Transfer of property to the National Government or to any of its political subdivisions
 Separate property of the surviving spouse
 Merger of usufruct in the owner of the naked title
 Properties held in trust by the decedent
 Acquisition and/or transfer expressly declared as not taxable
4. What will be used as basis in the valuation of property?
 The properties subject to Estate Tax shall be appraised based on its fair market value at the time of the decedent's
death.
 The appraised value of the real estate shall be whichever is higher of the fair market value, as determined by the
Commissioner (zonal value) or the fair market value, as shown in the schedule of values fixed by the Provincial or
City Assessor.
 If there is no zonal value, the taxable base is the fair market value that appears in the latest tax declaration.
 If there is an improvement, the value of improvement is the construction cost per building permit or the fair
market value per latest tax declaration.
5. What are the allowable deductions for Estate Tax Purposes?
Applicable for deaths occurring after the effectively of RA 8424 which is January 1, 1998
For a citizen or resident alien
A. Expenses, losses, indebtedness and taxes
(1) Actual funeral expenses (whether paid or unpaid) up to the time of interment, or an amount equal to five percent
(5%) of the gross estate, whichever is lower, but in no case to exceed P200,000.
(2) Judicial expenses of the testamentary or intestate proceedings.
(3) Claims against the estate.
(4) Claims of the deceased against insolvent persons where the value of the decedent’s interest therein is included in
the value of the gross estate; and,
(5) Unpaid mortgages, taxes and casualty losses
B. Property previously taxed (Vanishing Deduction) (Section 86(2) of the NIRC as amended by Republic Act No. 8424)
An amount equal to the value specified below of any property forming a part of the gross estate situated in the
Philippines of any person who died within five (5) years prior to the death of the decedent, or transferred to the
decedent by gift within five (5) years prior to his death, where such property can be identified as having been
received by the decedent from the donor by gift, or from such prior decedent by gift, bequest, devise or inheritance,
or which can be identified as having been acquired in exchange for property so received:
One hundred percent (100%) of the value, if the prior decedent died within one (1) year prior to the death of the
decedent, or if the property was transferred to him by gift within the same period prior to his death;
Eighty percent (80%) of the value, if the prior decedent died more than one (1) year but not more than two (2)
years prior to the death of the decedent, or if the property was transferred to him by gift within the same period
prior to his death;
Sixty percent (60%) of the value, if the prior decedent died more than two (2) years but not more than three (3)
prior to his death;
Forty per cent (40%) of the value, if the prior decedent died more than three (3) years but not more than four (4)
prior to his death; and
Twenty per cent (20%) of the value, if the prior decedent died more than four (4) years but not more than five
(5) years prior to the death of the decedent, or if the property was transferred to him by gift within the same
period prior to his death;
These deductions shall be allowed only where a donor’s tax or estate tax imposed was finally determined and paid by
or on behalf of such donor, or the estate of such prior decedent, as the case may be, and only in the amount finally
determined as the value of such property in determining the value of the gift, or the gross estate of such prior
decedent, and only to the extent that the value of such property is included in the decedent’s gross estate, and only if
in determining the value of the estate of the prior decedent, no Property Previously Taxed or Vanishing Deduction
was allowable in respect of the property or properties given in exchange therefor. (Section 6 & 7 of RR 2-2003)
C. Transfers for public use
D. The family home - fair market value but not to exceed P1, 000,000.00
The family home refers to the dwelling house, including the land on which it is situated, where the husband and wife,
or a head of the family, and members of their family reside, as certified to by the Barangay Captain of the locality.
The family home is deemed constituted on the house and lot from the time it is actually occupied as a family
residence and is considered as such for as long as any of its beneficiaries actually resides therein. (Arts. 152 and 153,
Family Code)
E. Standard deduction – A deduction in the amount of One Million Pesos (P1,000,000.00) shall be allowed as an
additional deduction without need of substantiation.
F. Medical expenses – All medical expenses (cost of medicines, hospital bills, doctor’s fees, etc.) incurred (whether paid
or unpaid) within one (1) year before the death of the decedent shall be allowed as a deduction provided that the same are
duly substantiated with official receipts. For services rendered by the decedent’s attending physicians, invoices,
statements of account duly certified by the hospital, and such other documents in support thereof and provided, further,
that the total amount thereof, whether paid or unpaid, does not exceed Five Hundred Thousand Pesos (P500,000).
G. Amount received by heirs under Republic Act No. 4917-Any amount received by the heirs from the decedent’s
employer as a consequence of the death of the decedent-employee in accordance with Republic Act No. 4917 is allowed
as a deduction provided that the amount of the separation benefit is included as part of the gross estate of the decedent.
H. Net share of the surviving spouse in the conjugal partnership or community property
For a non-resident alien
A. Expenses, losses, indebtedness and taxes
B. Property previously taxed
C. Transfers for public use
D. Net share of the surviving spouse in the conjugal partnership or community property
No deduction shall be allowed in the case of a non-resident decedent not a citizen of the Philippines, unless the
executor, administrator, or anyone of the heirs, as the case may be, includes in the return required to be filed in the
Section 90 of the Code the value at the time of the decedent’s death of that part of his gross estate not situated in the
Philippines.
Please note that the allowable deductions will vary depending on the law applicable at the time of the decedent’s
death.
6. What does the term "Funeral Expenses" include? (Sec 6 (A)(1) of RR 2-2003)
The term "FUNERAL EXPENSES" is not confined to its ordinary or usual meaning. They include:
(a) The mourning apparel of the surviving spouse and unmarried minor children of the deceased bought and used on
the occasion of the burial;
(b) Expenses for the deceased’s wake, including food and drinks;
(c) Publication charges for death notices;
(d) Telecommunication expenses incurred in informing relatives of the deceased;
(e) Cost of burial plot, tombstones, monument or mausoleum but not their upkeep. In case the deceased owns a
family estate or several burial lots, only the value corresponding to the plot where he is buried is deductible;
(f) Interment and/or cremation fees and charges; and
(g) All other expenses incurred for the performance of the rites and ceremonies incident to interment.
Expenses incurred after the interment, such as for prayers, masses, entertainment, or the like are not deductible. Any
portion of the funeral and burial expenses borne or defrayed by relatives and friends of the deceased are not
deductible. Actual funeral expenses shall mean those which are actually incurred in connection with the interment or
burial of the deceased. The expenses must be duly supported by official receipts or invoices or other evidence to
show that they were actually incurred.
7. What does the term "Judicial Expenses" include? (Sec 6 (A)(2) of RR 2-2003)
Expenses allowed as deduction under this category are those incurred in the inventory-taking of a assets comprising the
gross estate, their administration, the payment of debts of the estate, as well as the distribution of the estate among the
heirs. In short, these deductible items are expenses incurred during the settlement of the estate but not beyond the last day
prescribed by law, or the extension thereof, for the filing of the estate tax return. Judicial expenses may include:
(a) Fees of executor or administrator;
(b) Attorney’s fees;
(c) Court fees;
(d) Accountant’s fees;
(e) Appraiser’s fees;
(f) Clerk hire;
(g) Costs of preserving and distributing the estate;
(h) Costs of storing or maintaining property of the estate; and
(i) Brokerage fees for selling property of the estate.

Any unpaid amount for the aforementioned cost and expenses claimed under “Judicial Expenses” should be supported by
a sworn statement of account issued and signed by the creditor.
8. What are the requisites for deductibility of claims against the Estate? (Sec 6(A)(3) of RR 2-2003)
(a) The liability represents a personal obligation of the deceased existing at the time of his death except unpaid obligations
incurred incident to his death such as unpaid funeral expenses (i.e., expenses incurred up to the time of interment) and
unpaid medical expenses which are classified under a different category of deductions pursuant to these Regulations;
(b) The liability was contracted in good faith and for adequate and full consideration in money or money’s worth;
(c) The claim must be a debt or claim which is valid in law and enforceable in court;
(d) The indebtedness must not have been condoned by the creditor or the action to collect from the decedent must not
have prescribed.
9. How do we determine the fair market value of the unlisted stocks? (RR NO. 6-2013) (Annex
U)
In determining the value of the shares, the Adjusted Net Asset Method shall be used whereby all
assets and liabilities are adjusted to fair market values. The net of adjusted asset minus the
adjusted liability value is the indicated value of the equity.
For purposes of this item, the appraised value of real property at the time of sale shall be the
highest among the following:
(a) The fair market value as determined by the Commissioner, or
(b) The fair market value as shown in the schedule of values fixed by the Provincial and
City Assessors, or
(c) The fair market value as determined by Independent Appraiser.
Tax Reminders
DONOR’S TAX
Description
Donor’s Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between two or more
persons who are living at the time of the transfer. It shall apply whether the transfer is in trust or otherwise, whether the
gift is direct or indirect and whether the property is real or personal, tangible or intangible.
Tax Rates
Effective January 1, 1998 to present (Republic Act No. 8424)
Net Gift Over But not Over The Tax Shall be Plus Of the Excess Over
100,000.00 exempt
100,000.00 200,000.00 0 2% 100,000.00
200,000.00 500,000.00 P 2,000.00 4% 200,000.00
500,000.00 1,000,000.00 14,000.00 6% 500,000.00
1,000,000.00 3,000,000.00 44,000.00 8% 1,000,000.00
3,000,000.00 5,000,000.00 204,000.00 10% 3,000,000.00
5,000,000.00 10,000,000.00 404,000.00 12% 5,000,000.00
10,000,000.00 and over 1,004,000.00 15% 10,000,000.00
Notes:
1. Rate applicable shall be based on the law prevailing at the time of donation.
2. When the gifts are made during the same calendar year but on different dates, the donor's tax shall be computed
based on the total net gifts during the year.
Donation made to a stranger is subject to 30% of the net gift. A stranger is a person who is not a:

 brother, sister (whether by whole or half blood), spouse, ancestor and lineal descendants; or
 relative by consanguinity in the collateral line within the fourth degree of relationship.
Effective July 28, 1992 to December 31, 1997 (Republic Act No. 7499)
50,000.00 exempt
50,000.00 100,000.00 1.5% 50,000.00
100,000.00 200,000.00 P 750.00 3% 100,000.00
200,000.00 500,000.00 3,750.00 5% 200,000.00
500,000.00 1,000,000.00 18,750.00 8% 500,000.00
1,000,000.00 3,000,000.00 58,750.00 10% 1,000,000.00
3,000,000.00 5,000,000.00 258,750.00 15% 3,000,000.00
5,000,000.00 and over 558,750.00 20% 5,000,000.00
Donation made to a stranger is subject to 10% of the net gift. A stranger is a person who is not a:

 brother, sister (whether by whole or half blood), spouse, ancestor and lineal descendants; or
Effective January 16, 1981 to July 27, 1992 (Presidential Decree No. 1773)
1,000.00 exempt
1,000.00 50,000.00 1.5% 1,000.00
50,000.00 75,000.00 P 735.00 2.5% 50,000.00
75,000.00 100,000.00 1,360.00 3% 75,000.00
100,000.00 150,000.00 2,110.00 6% 100,000.00
150,000.00 200,000.00 5,110.00 9% 150,000.00
200,000.00 300,000.00 9,610.00 12% 200,000.00
300,000.00 400,000.00 21,610.00 15% 300,000.00
400,000.00 500,000.00 36,610.00 18% 400,000.00
500,000.00 625,000.00 54,610.00 21% 500,000.00

625,000.00 750,000.00 80,860.00 24% 625,000.00
750,000.00 875,000.00 110,860.00 28% 750,000.00
875,000.00 1,000,000.00 145,860.00 32% 875,000.00
1,000,000.00 2,000,000.00 185,860.00 36% 1,000,000.00
2,000,000.00 3,000,000.00 545,860.00 38% 2,000,000.00
3,000,000.00 925,860.00 40% 3,000,000.00
Donation made to a stranger shall be either the amount computed in accordance with the preceding schedule or twenty
percent (20%) of the net gifts, whichever is higher. A stranger is a person who is not a:

 brother, sister (whether by whole or half-blood), spouse, ancestor and lineal descendant; or
Please note that the donor’s tax rates will vary depending on the law applicable at the time of the gift. The pertinent laws
are as follow:

 Commonwealth Act. No. 466 – effective July 1, 1939 to September 14, 1950
 Republic Act No. 579 – effective September 15, 1950 to August 3, 1969
 Republic Act No. 6110 – effective August 4, 1969 to December 31, 1972
 Presidential Decree No. 69 – effective January 1, 1973 to January 15, 1981
 Presidential Decree No. 1773 – effective January 16, 1981 to July 27, 1992
 Republic Act No. 7499 – effective July 28, 1992 to December 31, 1997
 Republic Act No. 8424 – effective January 1, 1998 to present
[return to index]
Procedures
File the return in triplicate (two copies for the BIR and one copy for the taxpayer) with any Authorized Agent Bank
(AAB) of the RDO having jurisdiction over the place of the domicile of the donor at the time of the transfer. In places
where there are no AAB, the return will be filed directly with the Revenue Collection Officer or duly Authorized City or
Municipal Treasurer where the donor was domiciled at the time of the transfer, or if there is no legal residence in the
Philippines, with Revenue District No. 39 - South Quezon City.
In the case of gifts made by a non-resident alien, the return may be filed with Revenue District No. 39 - South Quezon
City, or with the Philippine Embassy or Consulate in the country where donor is domiciled at the time of the transfer.
Submit all documentary requirements and proof of payment to the Revenue District Office having jurisdiction over the
place of residence of the donor.
Please note that the time of filing and payment will vary depending on the law applicable at the time of gift.
Deadlines
Within thirty days (30) after the date the gift (donation) is made. A separate return will be filed for each gift (donation)
made on the different dates during the year reflecting therein any previous net gifts made during the same calendar year.
If the gift (donation) involves conjugal/community/property, each spouse will file separate returns corresponding to his/
her respective share in the conjugal/community property. This rule will also apply in the case of co-ownership over the
property.
1. Who are required to file the Donor’s Tax Return?
Every person, whether natural or juridical, resident or non-resident, who transfers or causes to transfer property by gift,
whether in trust or otherwise, whether the gift is direct or indirect and whether the property is real or personal, tangible or
intangible.
2. What donations are tax exempt?
A. In the Case of Gifts made by a Resident (Sec. 101 (A), NIRC as amended)

 Dowries or donations made on account of marriage before its celebration or within one year thereafter, by
parents to each of their legitimate, recognized natural, or adopted children to the extent of the first
P10,000
 Gifts made to or for the use of the National Government or any entity created by any of its agencies which
is not conducted for profit, or to any political subdivision of the said Government
 Gifts in favour of an educational and/or charitable, religious, cultural or social welfare corporation,
institution, accredited non-government organization, trust or philanthropic organization or research
institution or organization, provided not more than 30% of said gifts will be used by such donee for
administration purposes
B. In the Case of Gifts Made by a Non-resident not a Citizen of the Philippines (Sec. 101 (B), NIRC as amended)

 Gifts made to or for the use of the National Government or any entity created by any of its agencies which
is not conducted for profit, or to any political subdivision of the said Government
 Gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation,
institution, accredited non-government organization, trust or philantrophic organization or research
institution or organization, provided not more than 30% of said gifts will be used by such donee for
administration purposes
C. Tax Credit for Donor's Taxes Paid to a Foreign Country (Sec. 101 (C), NIRC as amended)

 In General. - The tax imposed by this Title upon a donor who was a citizen or a resident at the time of
donation shall be credited with the amount of any donor's tax of any character and description imposed by
the authority of a foreign country.
 Limitations on Credit. - The amount of the credit taken under this Section shall be subject to each of the
following limitations:
- The amount of the credit in respect to the tax paid to any country shall not exceed the same proportion of the
tax against which such credit is taken, which the net gifts situated within such country taxable under this Title
bears to his entire net gifts; and
- The total amount of the credit shall not exceed the same proportion of the tax against which such credit is
taken, which the donor's net gifts situated outside the Philippines taxable under this title bears to his entire net
gifts.
3. What are the bases in the valuation of property?
If the gift is made in property, the fair market value at that time will be considered the amount of gift.
In case of real property, the taxable base is the fair market value as determined by the Commissioner of Internal Revenue
(Zonal Value) or fair market value as shown in the latest schedule of values fixed by the provincial and city assessor (MV
per Tax Declaration), whichever is higher. (Sec. 88 and 102, NIRC as amended)
If there is no zonal value, the taxable base is the fair market value that appears in the tax declaration at the time of the gift
4. For purposes of Donor’s Tax, what does the term “Net Gift” mean?
For purposes of the donor’s tax, “NET GIFT” shall mean the net economic benefit from the transfer that accrues to the
donee. Accordingly, if a mortgaged property is transferred as a gift, but imposing upon the donee the obligation to pay the
mortgage liability, then the net gift is measured by deducting from the fair market value of the property the amount of
mortgage assumed. (sec. 11, RR No. 2-2003)
5. Under R.A. No. 7166, any contribution in cash or in kind to any candidate or political party or coalition of parties for
campaign purposes shall not be subject to the payment of any gift tax. What instance will it be subject to Donor’s Tax?
Those contributions in cash or in kind NOT duly reported to the Commission on Elections (COMELEC) shall not be
subject to donor’s tax.
Section 99 (C) of the Tax Code, as amended, provides that any contribution in cash or in kind for campaign purposes shall
be governed by R.A. No. 7166 or the Election Code.
Section 13 of the R.A. No. 7166 specifically states that any provision of law to the contrary notwithstanding any
contribution in cash or kind to any candidate or political party or coalition of parties for campaign purposes, duly reported
to the Commission shall not be subject to the payment of any gift tax (donor’s tax). Accordingly, the BIR can impose
donor’s tax on contributions of this nature. (Q-14, RMC No. 63-2009)
6. For purposes of Donor’s Tax, is a legally adopted child considered stranger?
A legally adopted child is entitled to all the rights and obligations provided by law to legitimate children, and therefore,
donation to him shall not be considered as donation made to stranger. (sec. 10, RR No. 2-2003)
7. For purposes of Donor’s Tax, are donations between businesses considered donations made between strangers?
Donation made between business organizations and those made between an individual and a business organization shall
be considered as donation made to a stranger. (sec. 10, RR No. 2-2003)
8. Are gratuitous donations to Homeowners’ Associations subject to Donor’s Tax?
Gifts, donations, and other contributions received by the Homeowners’ Associations (Associations) are subject to the
payment of donor’s tax pursuant to Section 98 and 99 of the Tax Code, as amended. Endowment or gifts received by such
associations are not exempt from donor’s tax considering that gifts to Associations are not qualified for exemption under
Section 101(A)(3) of the Tax Code. (II, RMC No. 53-2013)
9. Is an onerous donation or donation in exchange for goods, services or use or lease of properties to Homeowners’
Association subject to Donor’s Tax?
Pursuant to RMC No. 9-2013, Associations are subject to the corresponding internal revenue taxes imposed under the Tax
Code of 1997 on their income of whatever kind and character. In this regard, contributions to associations in exchange for
goods, services and use of properties constitute as other assessments/charges from activity in exchange for the
performance of a service, use of properties or delivery of an object. As such, these fees are income on the part of the
associations that are subject to income tax under Section 27 of the Tax Code, as amended. (III, RMC No. 53-2013)
10. What is the proper treatment for transactions involving transfer of property other than real property referred to in
Section 24 (D) for less than adequate and full consideration?
Where property, other than real property referred to in Section 24 (D) of the NIRC, as amended, is transferred for less
than adequate and full consideration in money or money’s worth, then the amount by which the fair market value of the
property exceeded the value of the consideration shall, for the purpose of Donor’s Tax, be deemed a gift, and shall be
included in computing the amount of gifts made during the calendar year. (Sec. 100, NIRC, as amended)
11. What entities are considered exempted from Donor’s Tax under special laws?
The list below consists of entities considered Donor’s Tax exempt under special laws including, but not limited to the
following:

 Rural Farm School (Sec. 14, R.A. No. 10618)
 People’s Television Network, Incorporated (Sec. 15, R.A. No. 10390)
 People’s Survival Fund (Sec. 13, R.A. No. 10174)
 Aurora Pacific Economic Zone and Freeport Authority (Sec. 7, R.A. No. 10083)
 Girl Scouts of the Philippines (Sec. 11, R.A. No. 10073)
 Philippine Red Cross (Sec. 5, R.A. No. 10072)
 Tubbataha Reefs Natural Park (Sec. 17, R.A. No. 10067)
 National Commission for Culture and the Arts (Sec. 35, R.A. No. 10066)
 Philippine Normal University (Sec. 7, R.A. No. 9647)
 University of the Philippines (Sec. 25, R.A. No. 9500)
 National Water Quality Management Fund (Sec. 9, R.A. No. 9275)
 Philippine Investors Commission (Sec. 9, R.A. No. 3850)
 Ramon Magsaysay Award Foundation (Sec. 2, R.A. 3676)
 Philippine-American Cultural Foundation (Sec. 4, P.D. 3062)
 International Rice Research Institute (Art. 5(2), PD 1620)
 Task Force on Human Settlements (Sec. 3(b)(8), E.O. 419)
 National Social Action Council (Sec. 4, P.D. 294)
 Aquaculture Department of the Southeast Asian Fisheries Development Center (Sec. 2, P.D. 292)
 Development Academy of the Philippines (Sec. 12, PD 205)
 Integrated Bar of the Philippines (Sec. 3, PD 181)
12. How do we determine the fair market value of the unlisted stocks?
In determining the value of the shares, the Adjusted Net Asset Method shall be used whereby all assets and liabilities are
adjusted to fair market values. The net of adjusted asset minus the adjusted liability value is the indicated value of the
equity.
For purposes of this item, the appraised value of real property at the time of sale shall be the highest among the
following:
(a) The fair market value as determined by the Commissioner, or
(b) The fair market value as shown in the schedule of values fixed by the Provincial and City Assessors,
or
(c) The fair market value as determined by Independent Appraiser. (RR NO. 6-2013) (Annex U)
VALUE-ADDED TAX
Description
Value-Added Tax is a form of sales tax. It is a tax on consumption levied on the sale, barter, exchange or lease of goods or
properties and services in the Philippines and on importation of goods into the Philippines. It is an indirect tax, which may
be shifted or passed on to the buyer, transferee or lessee of goods, properties or services.
[return to index]
Who are required to file vat returns?
 Any person or entity who, in the course of his trade or business, sells, barters, exchanges, leases goods or
properties and renders services subject to VAT, if the aggregate amount of actual gross sales or receipts exceed
One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919,500.00).
 A person required to register as VAT taxpayer but failed to register
 Any person, whether or not made in the course of his trade or business, who imports goods
[return to index]
Monthly VAT Declarations
Tax Form
BIR Form 2550M - Monthly Value-Added Tax Declaration (February 2007 ENCS)
Documentary Requirements
1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form No. 2307), if applicable
2. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax At Source
(SAWT), if applicable
3. Duly approved Tax Debit Memo, if applicable
4. Duly approved Tax Credit Certificate, if applicable
5. Authorization letter, if return is filed by authorized representative.
Procedures
1. Fill-up BIR Form No. 2550M in triplicate copies (two copies for the BIR and one copy for the taxpayer)
2. If there is payment:

 File the Monthly VAT declaration, together with the required attachments, and pay the VAT due
thereon with any Authorized Agent Bank (AAB) under the jurisdiction of the Revenue District
Office (RDO)/Large Taxpayers District Office (LTDO) where the taxpayer (head office of the
business establishment) is registered or required to be registered.
 The taxpayer must accomplish and submit BIR-prescribed deposit slip, which the bank teller shall
machine validate as evidence that payment was received by the AAB. The AAB receiving the tax
return shall stamp mark the word "Received" on the return and machine validate the return as proof
of filing the return and payment of the tax.
 In places where there are no duly accredited agent banks, file the Monthly VAT declaration, together
with the required attachments and pay the VAT due with the Revenue Collection Officer (RCO) or
duly authorized Treasurer of the Municipality where such taxpayer (head office of the business
establishment) is registered or required to be registered.
 The RCO or duly authorized Municipal/City Treasurer shall issue a Revenue Official Receipt upon
payment of the tax.
3. If there is no payment:

 File the Monthly VAT Declaration, together with the required attachments with the
RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent or duly authorized Municipal/
City Treasurer of Municipality/City where the taxpayer (head office of the business establishment) is
registered or required to be registered.
Deadline
 Manual Filing
Not later than the 20th day following the end of each month
 Through Electronic Filing and Payment System (eFPS):
Business Industry Period for filing Monthly VAT Declarations

Group A
Insurance and Pension Funding 25 days following the end of the month
Activities Auxiliary to Financial Intermediation
Construction
Water Transport
Hotels and Restaurants
Land Transport
Group B
Manufacture and Repair of Furniture 24 days following the end of the month
Manufacture of Basic Metals
Manufacture of Chemicals and Chemical Products
Manufacture of Coke, Refined Petroleum & Fuel Products
Manufacture of Electrical Machinery & Apparatus N.E.C.
Manufacture of Fabricated Metal Products
Manufacture of Food, Products & Beverages
Manufacture of Machinery & Equipment NEC
Manufacture of Medical, Precision, Optical Instruments
Manufacture of Motor Vehicles, Trailer & Semi-Trailers
Manufacture of Office, Accounting & Computing Machinery
Manufacture of Other Non-Metallic Mineral Products
Manufacture of Other Transport Equipment
Manufacture of Other Wearing Apparel
Manufacture of Paper and Paper Products
Manufacture of Radio, TV & Communication Equipment/ Apparatus
Manufacture of Rubber & Plastic Products
Manufacture of Textiles
Manufacture of Tobacco Products
Manufacture of Wood & Wood Products
Manufacturing N.E.C.
Metallic Ore Mining
Non-Metallic Mining & Quarrying
Group C
Retail Sale 23 days following the end of the month
Wholesale Trade and Commission Trade
Sale, Maintenance, Repair of Motor Vehicle, Sale of Automotive Fuel
Collection, Purification and Distribution of Water
Computer and Related Activities
Real Estate Activities
Group D
Air Transport 22 days following the end of the month
Electricity, Gas, Steam & Hot Water Supply
Postal & Telecommunications
Publishing, Printing & Reproduction of Recorded Media
Recreational, Cultural & Sporting Activities
Recycling
Renting of Goods & Equipment
Supporting & Auxiliary Transport Services
Group E
Activities of Membership Organizations, Inc. 21 days following the end of the month
Health and Social Work
Public Admin & Defense Compulsory Social Security
Research and Development
Agricultural, Hunting, and Forestry
Farming of Animals
Fishing
Other Service Activities
Miscellaneous Business Activities
Unclassified
[return to index]
Quarterly Value-Added Tax Return
Tax Form
BIR Form No. 2550Q - Quarterly Value-Added Tax Return (February 2007 ENCS)
Attachments to the Return
1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form 2307), if applicable
2. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax At Source
(SAWT), if applicable
4. Duly approved Tax Credit Certificate, if applicable
5. Previously filed return and proof of payment, for amended return
6. Authorization letter, if return is filed by authorized representative
Procedures
1. Fill-up BIR Form 2550Q in triplicate copies (two copies for the BIR and one copy for the taxpayer)

 File the Quarterly VAT Return, together with the required attachments, and pay the VAT due
thereon with any AAB under the jurisdiction of the RDO/LTDO where the taxpayer (head office of
the business establishment) is registered or required to be registered.
 The taxpayer must accomplish and submit BIR- prescribed deposit slip, which the bank teller shall
machine validate as evidence that payment was received by the AAB. The AAB receiving the tax
return shall stamp mark the word "Received" on the return and machine validate that return as proof
of filing the return and payment of the tax.
 In places where there are no duly accredited agent banks, file the Quarterly VAT Return, together
with the required attachments and pay the VAT due with the Revenue Collection Officer (RCO) or
duly authorized Treasurer of the Municipality where such taxpayer (head office of the business
establishment) is registered or required to be registered.
The RCO or duly authorized Municipal/City Treasurer shall issue a Revenue Official Receipt upon payment of
the tax.

 File the Quarterly VAT Return, together with the required attachments with the RDO/LTDO/Large
Taxpayers Assistance Division, Collection Agent or duly authorized Municipal/City Treasurer of
Municipality/City where the taxpayer (head office of the business establishment) is registered or
required to be registered.
Reminders:
1. Only one consolidated Monthly VAT Declaration/Quarterly VAT Return shall be filed covering the results of
operation of the head office as well as the branches for all lines of business subject to VAT.
2. The Quarterly List of Sales and Purchases shall be submitted in magnetic form using 3.5-inch floppy diskette
following the format provided under Section 4.114-3(g) of RR No. 16-2005.
3. The Quarterly List of Sales and Purchases shall be submitted through electronic filing facility for taxpayers
under the jurisdiction of the Large Taxpayers Service (LTS) and those enrolled under the eFPS.
Deadline
Within twenty five (25) days following the close of taxable quarter.
Tax Rates
 On sale of goods and properties - twelve percent (12%) of the gross selling price or gross value in money of the
goods or properties sold, bartered or exchanged
 On sale of services and use or lease of properties - twelve percent (12%) of gross receipts derived from the sale or
exchange of services, including the use or lease of properties
 On importation of goods - twelve percent (12%) based on the total value used by the Bureau of Customs in
determining tariff and customs duties, plus customs duties, excise taxes, if any, and other charges, such as tax to
be paid by the importer prior to the release of such goods from customs custody; provided, that where the customs
duties are determined on the basis of quantity or volume of the goods, the VAT shall be based on the landed cost
plus excise taxes, if any.
 On export sales and other zero-rated sales - 0%
[return to index]
Related Revenue Issuances
REVENUE REGULATIONS (RRs)

Issuance No. Subject Matter Date of Issue
RR No. 13-2008 Consolidated Regulations on Advance Value-Added Tax on the Sale of September 9,
Refined Sugar; Amending and/or Revoking All Revenue Issuances 2008
Issued to this Effect, and for Other Related Purposed
(published in Philippine Star on October 7, 2008)
Digest | Full Text | Annex A-B, E-J | Annex C | Annex D
RR No. 13-2007 Prescribing the Rules on the Advance Payment of Value-Added December 5,
Tax/Percentage Tax on the Transport of Naturally Grown Planted 2007
Timber Products
(published in Philippine Daily Inquirer on December 7, 2007)
Digest | Full Text | Annex A
RR No. 11-2007 Suspension of the Implementation of Revenue Regulations No. 6-2007 August 28,
(published in Manila Bulletin on August 29, 2007) 2007
Digest | Full Text
RR No. 6-2007 Consolidated Regulations on Advance Value-Added Tax on the Sale of May 9, 2007
Refined Sugar, Amending and/or Revoking all Revenue Issuances Issued
to this Effect, and for Other Related Purposes
(published in Manila Bulletin on May 11, 2007)
Digest | Full Text | Annex A-E | Annex F-J
RR No. 4-2007 Amending Certain Provisions of RR No. 16-2005, As Amended, March 20,
Otherwise Known as the Consolidated Value-Added Tax Regulations of 2007
2005
(published in Manila Bulletin on March 22, 2007)
Digest | Full Text
RR No. 2-2007 Amending Certain Provisions of RR No. 16-2005, As Amended, January 11,
Otherwise Known as the Consolidated Value-Added Tax Regulations of 2007
2005
(published in Manila Bulletin on January 12, 2007)
Digest | Full Text
RR No. 16-2005 Consolidated Value-Added Tax Regulations of 2005 October 19,
(published in Manila Times on October 21, 2005) 2005
Digest | Full Text
RR No. 7-2004 Implementing Sec. 109(bb) and (cc) of the National Internal Revenue May 21, 2004
Code, as Amended by RA 9238, Excluding Services Rendered by
Doctors of Medicine duly Registered with the Professional Regulatory
Commission (PRC), and Services Rendered by Lawyers Duly Registered
with the Integrated Bar of the Philippines (IBP) from the Coverage of
Value-Added Tax
(published in Philippine Star on May 28, 2004)
Digest | Full Text
RR No. 4-2004 Supplementing the Rules on the Advance Payment of Value-Added Tax March 26,
on Sale of Refined Sugar as Provided for in RR 2-2004 2004
(published in Taliba on March 31, 2004)
Digest | Full Text
RR No. 2-2004 Further Enhancing the Rules on the Advance Payment of Value-Added February 26,
Tax on Sale of Refined Sugar, Amending RR 7-89 and 29-2002 2004
(published in Manila Standard on February 28, 2004)
Digest | Full Text
RR No. 29-2003 Advance Payment of VAT on the Sale of Flour December 1,
(published in Manila Times on December 2, 2003) 2003
Digest | Full Text
RR No. 28-2003 Amending Further Pertinent Provisions of RR 2-98 as Amended, November 20,
Relative to the Issuance of Certificate of Value-Added Tax Withheld at 2003
Source, Thereby Amending RR 4-2002; and For the Purpose
(published in Manila Times on November 25, 2003)
Digest | Full Text
RR No. 27-2003 Regulations Further Amending the Transitory Provisions of RR 18-99 as October 9,
Amended by RR 12-2003, Pertaining to the Deadline for the Usage of 2003
Properly Stamped Unused Non-VAT Invoices or Receipts
(published in Manila Times on October 10, 2003)
Digest | Full Text
RR No. 5-2003 Rules and Regulations To Implement The Remittance of the Following: February 4,
(a) 70% Share of the ARMM in the Withholding Tax Payments of 2003
National Government Agencies (NGAs) and in the National Collections
from Taxpayers Other Than NGAs Provided for Under Section 9, Article
IX of RA 9054, Amending Therein Certain Sections of RR 4-98;
(b)Allotment to the Regional Government (RG) of the 30% Share of the
National Government (NG) of all Current Year Collections of Internal
Revenue Taxes Within ARMM for a Period of Five (5) Years as may be
Provided in the Annual Appropriations Act as Provided for Under
Section 15, Article IX of RA 9054; and c) 50% of the 80% Share of the
NG from the Yearly Incremental Revenue From VAT Collections
Within ARMM Received by the Central Government as Provided for
Under Section 15, in Relation to Section 9, both of Article IX of RA
9054 As Well As in Relation to Section 283 of the National Internal
Revenue Code (NIRC) of 1997
Digest | Full Text
RR No. 29-2002 Enhancing the Rules on the Advance Payment of Value- Added Tax on December 20,
the Sale of Refined Sugar, thereby Amending RR 7-89, and Other 2002
Purposes
(published in Philippine Star on December 22, 2002)
Digest | Full Text
RR No. 8-2002 Amending Further Pertinent Provisions of RR 7-95, as Amended , With June 24,
Respect to the Time of Filing of Quarterly VAT Returns; Contents and 2002
Submission of Quarterly Total of Monthly Sales and Purchases Per
Supplier or Customer, and Providing for the Penalties and Effect of Non-
Submission Thereof; and Clarifying Further the Mode of Remittance of
VAT Due From Non-Residents
(published in Philippine Daily Inquirer on June 27, 2002)
Digest | Full Text | Attachment 2550 (front) | Attachment 2550 (back)
RR No. 2-98 Implementing Republic Act No. 8424, "An Act Amending the National May 17, 1998
Internal Revenue Code (NIRC) as Amended" relative to the Withholding
on Income Subject to the Expanded Withholding Tax and Final
Withholding Tax, Withholding of Income Tax on Compensation,
Withholding of Creditable VAT and other Percentage Taxes
Digest
REVENUE MEMORANDUM ORDERS (RMOs)
RMO No. 3-2009 Amendment and Consolidation of the Guidelines in the Conduct of January 23,
Surveillance and Stock-Taking Activities, and the Implementation of the 2009
Administrative Sanction of Suspension and Temporary Closure of
Business
Digest | Full Text | Annex A | Annex B | Annex D | Annex E | Annex F |
Excel File Annexes
RMO No. 6-2008 Prescribing the Guidelines and Procedures in the Printing, Requisition, February 20,
Reporting, Issuance and Distribution of Certificate of Advance Payment 2008
of Value-Added Tax/ Percentage Tax on the Transport of Naturally
Grown and Planted Timber Products as Prescribed in RR No. 13-2007
Dated October 15, 2007
Digest | Full Text | Annex A | Annex B-F
RMO No. 16-2007 Prescribing Additional Procedures in the Audit of Input Taxes Claimed July 23,
in the VAT Returns by Revenue Officers and Amending "Annex B" of 2007
RMO No. 53-98 With Respect to the Checklist of Documents to be
Submitted by a Taxpayer Upon Audit of his/its VAT Liabilities as well
as the Mandatory Reporting Requirements to be Prepared by the
Assigned Revenue Officer/s Relative Thereto, All of Which Shall Form
an Integral Part of the Docket
Digest | Full Text
RMO No. 7-2006 Prescribing the guidelines and procedures in the processing of February 28,
applications for zero-rating of effectively zero-rated transactions for 2006
Value-Added Tax purposes
Digest | Full Text | Annex A | Annex B-B2 | Annex C-D
RMO No. 26-2005 Suspension of issuance of assessments for deficiency Value-Added Tax October 21,
against cinema/theater operators/owners 2005
Digest | Full Text
RMO No. 22-2004 Value-Added Tax (VAT) Exemption Certificate/ Identification Card May 24, 2004
Issued to qualified foreign embassies and their qualified personnel
Amending/ Modifying RMO No. 81-99
Digest | Full Text
RMO No. 5-2004 Prescribing the guidelines and procedures in the implementation of RR February 4,
No. 29-2003 on the advance payment of Value-Added Tax on the sale of 2004
flour
RMO No. 35-2002 Prescribing the guidelines and procedures in the processing and issuance December 11,
of Authority to Release Imported Goods (ATRIG) for Excise and Value- 2002
Added Tax Purposes
Digest | Full Text | Annex A | Annex B | Annex C | Annex D | Flowchart
RMO No. 9-2000 Tax treatment of sales of goods, properties and services made by VAT- March 29,
registered suppliers to BOI-registered manufacturers-exporters with 2000
100% export sales
Digest
RMO No. 81-99 Issuance of Value-Added Tax (VAT) Exemption Certificate to all November 5,
qualified embassies and their personnel 1999
Digest
RMO No. 40-94 Prescribing the Modified Procedures on the Processing of Claims for
VAT Credit/ Refund
REVENUE MEMORANDUM CIRCULARS (RMCs)
RMC No. 77-2008 Taxability of Director’s Fees Received By Directors Who are not December 3,
Employees of the Corporation for VAT or Percentage Tax Purposes as 2008
Espoused Under Revenue Memorandum Circular No. 34-2008
Digest | Full Text
RMC No. 46-2008 Clarification of Issues Concerning Common Carriers by Air and Their June 20,
Agents Relative to the Revenue and Receipt from Transport of 2008
Passengers, Goods/Cargoes and Mail, and from Excess Baggage
Digest | Full Text
RMC No. 34-2008 Tax Treatment of Director’s Fees for Income Tax and Business Tax April 18,
Purposes 2008
Digest | Full Text
RMC No. 59-2007 Clarifying the Effect of Suspension of RR No. 6-2007, Otherwise September 14,
Known As the "Consolidated Regulations on Advance Value-Added Tax 2007
on the Sale of Refined Sugar, Amending and/or Revoking All Revenue
Issuances Issued to this Effect and for Other Related Purposes"
Digest | Full Text
RMC No. 53-2007 Reiteration of the Amendment Made by RA No. 9337 Imposing VAT on August 7,
the Sale of Non-Food Agricultural Products, Marine and Forest Products 2007
and on the Sale of Cotton and Cotton Seeds in their Original State
Digest | Full Text
RMC No. 39-2007 Clarifying the Income Tax and VAT Treatment of Agency Fees/Gross June 13,
Receipts of Security Agencies Including the Withholding of Taxes Due 2007
Thereon
RMC No. 35-2006 Clarifying the Proper VAT and EWT Treatment of Freight and Other June 30,
Incidental Charges Billed by Freight Forwarders 2006
Digest | Full Text
RMC No. 31-2006 Value Added Tax (VAT) on the Construction or Renovation of Official May 30,
Buildings or Properties of the United States of America Embassy 2006
RMC No. 30-2006 Prescribing the Submission of a Narrative Memorandum Report to May 22,
Accompany the VAT Credit Evaluation Report and Requiring the 2006
Attachment of Certain Documents Prior to Approval of the Tax Credit
Certificate (TCC) Recommended by the Tax and Revenue Group (TRG),
Department of Finance One-Stop Shop Inter-Agency Tax Credit and
Duty Drawback Center (DOF-OSS)
Digest | Full Text
RMC No. 22-2006 Clarifying certain issues relating to the implementation of the increase in April 6, 2006
the Value-Added Tax rate from 10% to 12% on the sale of goods
pursuant to Republic Act No. 9337
Digest | Full Text
RMC No. 21-2006 Clarification of Issues on How to Fill-up the new Version of VAT Forms April 6, 2006
(September, 2005 Version) and other Related Issues
Digest | Full Text
RMC No. 8-2006 Clarifying certain issues relating to the implementation of the increase in February 1,
the VAT rate from 10% to 12% pursuant to Republic Act No. 9337 2006
Digest | Full Text
RMC No. 5-2006 Prescribing the use of the Government Money Payment Chart January 20,
Implementing Sections 2.57.2, 4.114 and 5.116 of Revenue Regulations 2006
No. 2-98 as amended by Revenue Regulations No. 16-2005 in relation to
Sections 57 (B), 114 (C) and 116 to 123 of Republic Act No. 8424 as
amended by Republic Act No. 9337
RMC No. 72-2005 Transition procedures for all Electronic Filing and Payment System filers December 22,
(Large Taxpayers/Top 10,000 Corporations) in filing tax returns affected 2005
by the new VAT Law (R.A. 9337)
Digest | Full Text
RMC No. 68-2005 Enhanced VAT forms – BIR Form No. 2550M (Monthly Value-Added December 8,
Tax Declaration) and BIR Form No. 2550Q (Quarterly Value-Added Tax 2005
Return) – September 2005 version
Digest | Full Text | Annex A-1 | Annex A-2 | Annex B-1 | Annex B-2
RMC No. 62-2005 Revised guidelines in the registration and invoicing requirements November 3,
including clarification on common issues affecting Value-Added Tax 2005
(VAT) taxpayers Pursuant to RA No. 9337 (An Act Amending Sections
27, 28, 34, 106, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121,
148, 151, 236, 237 and 288 of the National Internal Revenue Code of
1997, as Amended, and for other Purposes)
Digest | Full Text
RMC No. 57-2005 Attachments to the quarterly VAT return to be filed starting October 25, October 20,
2005 2005
Digest | Full Text
RMC No. 52-2005 Value-Added Tax (VAT) Liability of the Tollway Industry October 3,
Digest | Full Text 2005
RMC No. 29-2005 Clarifying the provisions of Republic Act No. 9337 (VAT Law of 2005) July 1,
applicable to the petroleum industry 2005
Digest | Full Text
RMC No. 70-2004 Clarification on proper determination of amount of Value-Added Tax on November 23,
VAT invoices or VAT official receipts 2004
Digest | Full Text
RMC No. 60-2004 Clarification regarding the withholding of creditable Value-Added Tax September 23,
by government offices for purchases of P1,000.00 and below 2004
Digest | Full Text
RMC No. 37-2004 Settlement of the Value-Added Tax liabilities of pawnshops for taxable June 16,
years 1996 to 2002 2004
Digest | Full Text | Annex A | Annex 1 | Annex 2
RMC No. 9-2004 Guidelines and Policies Applicable to the Business Tax Applicable to February 20,
Banks and Non-Bank Financial Intermediaries Performing Quasi- 2004
Banking Functions and other Non-Bank Financial Intermediaries As A
Result of the Enactment and Effectivity of Republic Act No. 9238, An
Act Amending Certain Provisions of the National Internal Revenue Code
of 1997, As Amended, byExcluding Several Services from the Coverage
of the Value-Added Tax and Re-Imposing the Gross Receipts Tax on
Banks and Non-Bank Financial IntermediariesPerforming Quasi-
Banking Functions and Other Non-Bank Financial Intermediaries
Beginning January 1, 2004
Digest | Full Text | RA No. 9238
RMC No. 2-2004 Clarifying the Issues on VAT Taxable Transactions of January 7,
Philippine Ports Authority Amending Revenue 2004
Memorandum Circular No. 20-88, Pursuant to Republic
Act No. 7716 as Implemented by Revenue Regulations
No. 7-95
Digest | Full Text
RMC No. 6-2003 Clarifying Certain Issues Relative to the Services Rendered by January 22,
Individual Professional Practitioners, General Professional Partnerships, 2003
Entertainers, and Professional Athletes Who Are Subject to the Value-
Added Tax or Percentage Tax, Whichever is Applicable, Beginning
January 1, 2003
RMC No. 61-2003 Issuance of VAT Invoices/Receipt for Non-VAT/Exempt Sale of Goods, October 8,
Properties or Services 2003
Digest | Full Text
RMC No. 49-2003 Amending Answer to Question Number 17 of Revenue Memorandum August 27,
Circular No. 42-2003 and Providing Additional Guidelines on Issues 2003
Relative to the Processing of Claims for Value-Added Tax (VAT)
Credit/Refund, Including Those Filed with the Tax and Revenue Group,
One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center,
Department of Finance (OSS-DOF) by Direct Exporters
Digest | Full Text
RMC No. 42-2003 Clarifying certain issues raised relative to the processing of claims for July 23,
Value-Added Tax (VAT) credit/refund, including those filed with the 2003
Tax and Revenue Group, One-Stop Shop Inter-Agency Tax Credit and
Duty Drawback Center, Department of Finance (OSS-DOF) by Direct
Exporters
Digest | Full Text
RMC No. 30-2003 Clarification of Paragraph 1-Q of Revenue Memorandum Circular No. May 21,
28-2003 2003
Digest | Full Text
RMC No. 56-2002 Taxability of Health Maintenance Organizations (HMOs) for VAT December 18,
purposes 2002
Digest
RMC No. 45-2001 Taxability of Pawnshop Operators for VAT Purposes October 12,
2001
RMC No. 28-2001 Taxability of Movie/Cinema House Operators for VAT Purposes July 2,
2001
RMC No. 25-99 Disseminating the Ruling of the Commissioner of Internal Revenue on March 18,
the Non-eligibility for VAT Zero-Rating of Automobile Sales to Entities 1999
Registered with PEZA, SBMA and Clark Development Authority
RMC No. 32-99 Japanese Contractors undertaking Overseas Economic Cooperation Fund May 3,
of Japan (OECF) Funded Project are Exempt from the eight and one half 1999
percent (8.5%) creditable VAT imposed under Section 114(C) of the Tax
Code of 1997 and to the One Percent (1%) Expanded Withholding Tax
(EWT) imposed under Section 2.57.2(E) of RR No. 2-98 implementing
Section 57(B) of the Tax Code of 1997
FREQUENTLY ASKED QUESTIONS
I. General VAT Queries
Who are liable to register as VAT taxpayers?
Any person who, in the course of trade or business, sells, barters or exchanges goods or properties or engages in the
sale or exchange of services shall be liable to register if:
a. His gross sales or receipts for the past twelve (12) months, other than those that are exempt under Section
109 (A) to (U), have exceeded One Million Five Hundred Thousand Pesos (P1,500,000.00): or
b. There are reasonable grounds to believe that his gross sales or receipts for the next twelve (12) months, other
than those that are exempt under Section 109 (A) to (U), will exceed One Million Five Hundred Thousand
Pesos (P1,500,000.00).
When is a new VAT taxpayer required to apply for registration and pay the registration fee?
New VAT taxpayers shall apply for registration as VAT Taxpayers and pay the corresponding registration fee of five
hundred pesos (P500.00) using BIR Form No. 0605 for every separate or distinct establishment or place of business
before the start of their business following existing issuances on registration.
Thereafter, taxpayers are required to pay the annual registration fee of five hundred pesos (P500.00) not later than
January 31, every year.
What compliance activities should a VAT taxpayer, after registration as such, do promptly or periodically?
The following compliance activities must be performed by a VAT-registered taxpayer:
a. Pay the annual registration fee of P500.00 for every place of business or establishment that generates sales;
b. Register the books of accounts of the business/occupation/calling, including practice of profession, before
using the same;
c. Register the sales invoices and official receipts as VAT-invoices or VAT official receipts for use on
transactions subject to VAT. (If there are other transaction not subject to VAT, a separate set of non-VAT
invoices or non-VAT official receipts need to be registered for use on transactions not subject to VAT);
d. Filing of the Monthly Value-added Tax Declaration on or before the 20th day following the end of the
taxable month (for manual filers)/on or before the prescribed due dates enunciated in RR No. 16-2005 (for e-
filers) using BIR Form No. 2550M and of the Quarterly VAT Return on or before the 25th day following the
end of the taxable quarter using BIR Form No. 2550Q, reflecting therein gross receipts (for seller of service)/
gross sales (for seller of goods) and output tax (VAT on sales); purchases of goods and services made in the
course of trade or business/exercise of profession and input tax (VAT on purchases), other allowable tax credits
as in the case of advance VAT payment and VAT withheld by government payors, and VAT payable or excess
input VAT, whichever is applicable, with the accredited agent banks (AABs) of the BIR or Revenue Collection
Officers (RCOs) of the BIR (in areas without AAB), for returns with payment, or with the RDO/LTDO having
jurisdiction over the taxpayer (home RDO/LTDO), for returns without payment. (The monthly VAT
Declaration and the Quarterly VAT Return shall reflect the consolidated total for all the taxable lines of activity
and all the establishments - head office and branches);
e. Submit with the RDO/LTDO having jurisdiction over the taxpayer, on or before the deadline set in the filing
of the Quarterly VAT Return, the soft copy of the Quarterly Schedule of Monthly Sales and Output Tax (if the
quarterly sales exceed P2,500,000.00), and the soft copy of the Quarterly Schedule of Monthly Domestic
Purchases and Input Tax/ the soft copy of the Schedule of Transactional/Individual Importation ( if the quarterly
total purchases exceed P1,000,000.00), reflecting therein the required data prescribed under existing revenue
issuances.
How do we determine the main or principal business of a taxpayer who is engaged in mixed business activities?
In determining the main or principal business of a taxpayer, we apply the predominance test. Under this test, if more
than fifty (50%) of its gross sales and/or gross receipts comes from its business/es subject to VAT, its main/principal
business falls within the VAT system making its status as a VAT person. Otherwise, he can not be considered as a
VAT person eligible for the election provided for under Section 109(2) of the Tax Code.
What is the liability of a taxpayer becoming liable to VAT and did not register as such?
Any person who becomes liable to VAT and fails to register as such shall be liable to pay the output tax as if he is a
VAT-registered person, but without the benefit of input tax credits for the period in which he was not properly
registered.
Who may opt to register as VAT and what will be his liability?
1. Any person who is VAT-exempt under Sec. 4.109-1 (B) (1) (V) not required to register for VAT may, in relation
to Sec. 4.109-2, elect to be VAT-registered by registering with the RDO that has jurisdiction over the head office of
that person, and pay the annual registration fee of P500.00 for every separate and distinct establishment.
2. Any person who is VAT-registered but enters into transactions which are exempt from VAT (mixed transactions)
may opt that the VAT apply to his transactions which would have been exempt under Section 109(1) of the Tax
Code, as amended [Sec. 109(2)].
3. Franchise grantees of radio and/or television broadcasting whose annual gross receipts of the preceding year do
not exceed ten million pesos (P10,000,000.00) derived from the business covered by the law granting the franchise
may opt for VAT registration. This option, once exercised, shall be irrevocable. (Sec. 119, Tax Code).
4. Any person who elects to register under optional registration shall not be allowed to cancel his registration for the
next three (3) years.
The above-stated taxpayers may apply for VAT registration not later than ten (10) days before the beginning of the
calendar quarter and shall pay the registration fee unless they have already paid at the beginning of the year. In any
case, the Commissioner of Internal Revenue may, for administrative reason deny any application for registration.
Once registered as a VAT person, the taxpayer shall be liable to output tax and be entitled to input tax credit
beginning on the first day of the month following registration.
What are the instances when a VAT-registered person may cancel his VAT registration?
1. If he makes a written application and can demonstrate to the commissioner's satisfaction that his gross sales or
receipts for the following twelve (12) months, other than those that are exempt under Section 109 (A) to (U), will not
exceed one million five hundred thousand pesos (P1,500,000.00); or
2. If he has ceased to carry on his trade or business, and does not expect to recommence any trade or business within
the next twelve (12) months.
When will the cancellation for registration be effective?
The cancellation for registration will be effective from the first day of the following month the cancellation was
approved.
What is the invoicing/ receipt requirement of a VAT-registered person?

A VAT registered person shall issue :
1. A VAT invoice for every sale, barter or exchange of goods or properties; and
2. A VAT official receipt for every lease of goods or properties and for every sale, barter or exchange of
services.
May a VAT-registered person issue a single invoice/ receipt involving VAT and Non-VAT transactions?
Yes. He may issue a single invoice/ receipt involving VAT and non-VAT transactions provided that the invoice or
receipt shall clearly indicate the break-down of the sales price between its taxable, exempt and zero-rated
components and the calculation of the Value-Added Tax on each portion of the sale shall be shown on the invoice or
receipt.
May a VAT- registered person issue separate invoices/ receipts involving VAT and Non-VAT transactions?
Yes. A VAT registered person may issue separate invoices/ receipts for the taxable, exempt, and zero-rated
component of its sales provided that if the sales is exempt from value-added tax, the term "VAT-EXEMPT SALE"
shall be written or printed prominently on the invoice or receipt and if the sale is subject to zero percent (0%) VAT,
the term "ZERO-RATED SALE" shall be written or printed prominently on the invoice or receipt.
How is the Value-Added Tax presented in the receipt/ invoice?
The amount of the tax shall be shown as a separate item in the invoice or receipt.
Sample:
Sales Price P 100,000.00

VAT 12,000.00
Invoice Amount 112,000.00
What is the information that must be contained in the VAT invoice or VAT official receipt?
1. Name of Seller
2. Business Style of the Seller
3. Business Address of the Seller
4. Statement that the seller is a VAT-registered person, followed by his TIN
5. Name of Buyer
6. Business Style of Buyer
7. Address of Buyer
8. TIN of buyer, if VAT- registered and amount exceed P1,000.00
9. Date of transaction
10. Quantity
11. Unit cost

12. Description of the goods or properties or nature of the service
13. Purchase price plus the VAT, provided that:

 The amount of tax shall be shown as a separate item in the invoice or receipt;
 If the sale is exempt from VAT, the term "VAT-EXEMPT SALE" shall be written or printed
prominently on the invoice or receipt;
 If the sale is subject to zero percent (0%) VAT, the term "ZERO-RATED SALE" shall be written or
printed prominently on the invoice receipt; and
 If the sale involves goods, properties or services some of which are subject to and some of which are
zero-rated or exempt from VAT, the invoice or receipt shall clearly indicate the breakdown of the
sales price between its taxable, exempt and zero-rated components, and the calculation of the VAT
on each portion of the sale shall be shown on the invoice or receipt.
14. Authority to Print Receipt Number at the lower left corner of the invoice or receipt.
What is the liability of a taxpayer not registered as VAT and issues a VAT invoice/ receipt?
The non-VAT registered person shall, in addition to paying the percentage tax applicable to his transactions, be liable
to VAT imposed in Section 106 or 108 of the Tax Code without the benefit of any input tax credit plus 50%
surcharge on the VAT payable (output tax). If the invoice/ receipts contain the required information, purchaser shall
be allowed to recognize an input tax credit.
What is the liability of a VAT-registered person in the issuance of a VAT invoice/ receipt for VAT-exempt transactions?
If a VAT-registered person issues a VAT invoice or VAT official receipt for a VAT-exempt transaction but fails to
display prominently on the invoice or receipt the words "VAT-EXEMPT SALE", the transaction shall become
taxable and the issuer shall be liable to pay the VAT thereon. The purchaser shall be entitled to claim an input tax
credit on his purchase.
What is "output tax"?
Output tax means 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.
What is "input tax"?
Input tax means 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. It shall also include
the transitional input tax determined in accordance with Section 111 of the Tax Code, presumptive input tax and
deferred input tax from previous period.
What comprises "goods or properties"?
The term "goods or properties" shall mean all tangible and intangible objects, which are capable of pecuniary
estimation and shall include, among others:
a. Real properties held primarily for sale to customers or held for lease in the ordinary course of trade or
business;
b. The right or the privilege to use patent, copyright, design or model, plan, secret formula or process, goodwill,
trademark, trade brand or other like property or right;
c. The right or privilege to use in the Philippines of any industrial, commercial or scientific equipment;
d. The right or the privilege to use motion picture films, films, tapes and discs; and
e. Radio, television, satellite transmission and cable television time.
What comprises "sale or exchange of services"?
The term "sale or exchange of services" means the performance of all kinds of services in the Philippines for others
for a fee, remuneration or consideration, whether in kind or in cash, including those performed or rendered by the
following:
a. Construction and service contractors;
b. Stock, real estate, commercial, customs and immigration brokers;
c. Lessors of property, whether personal or real;
d. Persons engaged in warehousing services;
e. Lessors or distributors of cinematographic films;
f. Persons engaged in milling, processing, manufacturing or repacking goods for others;
g. Proprietors, operators or keepers of hotels, motels, rest houses, pension houses, inns, resorts, theatres, and
movie houses;
h. Proprietors or operators of restaurants, refreshment parlors, cafes, and other eating places, including clubs
and caterers;
i. Dealers in securities;
j. Lending investors;
k. Transportation contractors on their transport of goods or cargoes, including persons who transport goods or
cargoes for hire and other domestic common carriers by land relative to their transport of goods or cargoes;
l. Common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in
the Philippines to another place in the Philippines;
m. Sales of electricity by generation, transmission, and/or distribution companies;
n. Franchise grantees of electric utilities, telephone and telegraph, radio and/or television broadcasting and all
other franchise grantees, except franchise grantees of radio and/or television broadcasting whose annual gross
receipts of the preceding year do not exceed Ten Million Pesos (P10,000,000.00), and franchise grantees of gas
and water utilities;
o. Non-life insurance companies (except their crop insurances), including surety, fidelity, indemnity and
bonding companies; and
p. Similar services regardless of whether or not the performance thereof calls for the exercise of use of the
physical or mental faculties.
The phrase "sale or exchange of services" shall likewise include:
a. The lease of use of or the right or privilege to use any copyright, patent, design or model, plan, secret
formula or process, goodwill, trademark, trade brand or other like property or right;
b. The lease or the use of, or the right to use of any industrial, commercial or scientific equipment;
c. The supply of scientific, technical, industrial or commercial knowledge or information;
d. The supply of any assistance that is ancillary and subsidiary to and is furnished as a means of enabling the
application or enjoyment of any such property, or right or any such knowledge or information;
e. The supply of services by a nonresident person or his employee in connection with the use of property or
rights belonging to, or the installation or operation of any brand, machinery or other apparatus purchased from
such non-resident person;
f. The supply of technical advice, assistance or services rendered in connection with technical management or
administration of any scientific, industrial or commercial undertaking, venture, project or scheme;
g. The lease of motion picture films, films, tapes and discs; and
h. The lease or the use of or the right to use radio, television, satellite transmission and cable television time.
What is a zero-rated sale?
It is a sale, barter or exchange of goods, properties and/or services subject to 0% VAT pursuant to Sections 106 (A)
(2) and 108 (B) of the Tax Code. It is a taxable transaction for VAT purposes, but shall not result in any output tax.
However, the input tax on purchases of goods, properties or services, related to such zero-rated sales, shall be
available as tax credit or refund in accordance with RR No. 16-2005.
What transactions are considered as zero-rated sales?
The following services performed in the Philippines by VAT-registered person shall be subject to zero percent (0%)
rate:
a. Processing, manufacturing or repacking goods for other persons doing business outside the Philippines
which goods are subsequently exported where the services are paid for in acceptable foreign currency and
accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);
b. Services other than processing, manufacturing or repacking rendered to a person engaged in business
conducted outside the Philippines or to a non-resident person engaged in business who is outside the Philippines
when the services are performed, the consideration for which is paid for in acceptable foreign currency and
accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);
c. Services rendered to persons or entities whose exemption under special laws or international agreements to
which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate;
d. Services rendered to persons engaged in international shipping or air transport operations, including leases of
property for use thereof; Provided, however, that the services referred to herein shall not pertain to those made
to common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in
the Philippines to another place in the Philippines, the same being subject to twelve percent (12%) VAT under
Sec. 108 of the Tax Code starting Feb. 1, 2006;
e. Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods

for an enterprise whose export sales exceeds seventy percent (70%) of total annual production;
f. Transport of passengers and cargo by domestic air or sea carriers from the Philippines to a foreign country.
Gross receipts of international air carriers doing business in the Philippines and international sea carriers doing
business in the Philippines are still liable to a percentage tax of three percent (3%) based on their gross receipts
as provided for in Sec. 118 of the Tax Code but shall not be liable to VAT; and
g. Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass,
solar, wind, hydropower, geothermal and steam, ocean energy, and other shipping sources using technologies
such as fuel cells and hydrogen fuels; Provided, however that zero-rating shall apply strictly to the sale of power
or fuel generated through renewable sources of energy, and shall not extend to the sale of services related to the
maintenance or operation of plants generating said power .
The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:
a. Export sales

 The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of
any shipping arrangement that may be agreed upon which may influence or determine the
transfer of ownership of the goods so exported, paid in acceptable foreign currency or its
equivalent in goods or services, and accounted for in accordance with the rules and regulations
of the Bangko Sentral ng Pilipinas (BSP);
 The sale of raw materials or packaging materials to a non-resident buyer for delivery to as
resident local export-oriented enterprise to be used in manufacturing, processing, packing or
repacking in the Philippines of the said buyer's goods, paid for in acceptable foreign currency,
and accounted for in accordance with the rules and regulations of the BSP;
 The sale of raw materials or packaging materials to an export-oriented enterprise whose export
sales exceed seventy percent (70%) of total annual production;
 Sale of gold to the BSP;
 Transactions considered export sales under Executive Order No. 226, otherwise known as the
Omnibus Investments Code of 1987, and other special laws; and
 The sale of goods, supplies, equipment and fuel to persons engaged in international shipping or
international air transport operations; Provided, that the same is limited to goods, supplies,
equipment and fuel pertaining to or attributable to the transport of goods and passengers from a
port in the Philippines directly to a foreign port, or vice-versa without docking or stopping at
any other port in the Philippines unless the docking or stopping at any other Philippine port is
for the purpose of unloading passengers and/or cargoes that originated from abroad, or to load
passengers and/or cargoes bound for abroad; Provided, further, that if any portion of such fuel,
goods or supplies is used for purposes other than the mentioned in this paragraph, such portion
of fuel, goods and supplies shall be subject to twelve percent (12%) output VAT.
b. Foreign Currency Denominated Sales
The sale to a non-resident of goods, except those mentioned in Sections 149 and 150 of the Tax Code,
assembled or manufactured in the Philippines for delivery to a resident in the Philippines, paid for in
acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP.
c. Sales to Persons or Entities Deemed Tax-exempt under Special Law or International Agreement
Sale of goods or property to persons or entities who are tax-exempt under special laws or international
agreements to which the Philippines is a signatory, such as, Asian Development Bank (ADB),
International Rice Research Institute (IRRI), etc.
Where will taxpayers file their applications for VAT zero-rating?
Taxpayers shall file their application directly with the Audit Information, Tax Exemption and Incentives Division
(AITEID) under the Assessment Service, or with the LTAID I and II, BIR National Office, as the case may be.
What is a Contractor's Final Payment Release Certificate and where should taxpayers file their application for this?
The Contractor's Final Payment Release Certificate is issued by the BIR before a government contractor is fully paid
for his contract with the government. Taxpayers may file their application at the BIR National Office at the Audit
Information, Tax Exemption and Incentives Division (AITEID)
What transactions are considered deemed sales?
The following transactions are considered as deemed sales:
a. Transfer, use or consumption, not in the course of business, of goods or properties originally intended for
sale or for use in the course of business. Transfer of goods or properties not in the course of business can take
place when VAT-registered person withdraws goods from his business for his personal use;
b. Distribution or transfer to:

 Shareholders or investors as share in the profits of the VAT-registered person; or
 Creditors in payment of debt or obligation
c. Consignment of goods if actual sale is not made within sixty (60) days following the date such goods were
consigned. Consigned goods returned by the consignee within the 60-day period are not deemed sold;
d. Retirement from or cessation of business, with respect to all goods on hand, whether capital goods, stock-in-
trade, supplies or materials as of the date of such retirement or cessation, whether or not the business is
continued by the new owner or successor. The following circumstances shall, among others, give rise to
transactions "deemed sale";

 Change of ownership of the business. There is a change in the ownership of the business when
a single proprietorship incorporated; or the proprietor of a single proprietorship sells his entire
business.
 Dissolution of a partnership and creation of a new partnership which takes over the business.
What is VAT-exempt sale?
It is a sale of goods, properties or service and the use or lease of properties which is not subject to output tax and
whereby the buyer is not allowed any tax credit or input tax related to such exempt sale.
What are the VAT-exempt transactions?
a. Sale or importation of agricultural and marine food products in their original state, livestock and poultry of a kind
generally used as, or yielding or producing foods for human consumption; and breeding stock and genetic materials
therefore;
b. Sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn, livestock and poultry feeds,
including ingredients, whether locally produced or imported, used in the manufacture of finished feeds (except
specialty feeds for race horses, fighting cocks, aquarium fish, zoo animals and other animals considered as pets);
c. Importation of personal and household effects belonging to residents of the Philippines returning from abroad and
non-resident citizens coming to resettle in the Philippines; Provided, that such goods are exempt from custom duties
under the Tariff and Customs Code of the Philippines;
d. Importation of professional instruments and implements, wearing apparel, domestic animals, and personal
household effects (except any vehicle, vessel, aircraft, machinery and other goods for use in the manufacture and
merchandise of any kind in commercial quantity) belonging to persons coming to settle in the Philippines, for their
own use and not for sale, barter or exchange, accompanying such persons, or arriving within ninety (90) days before
or after their arrival, upon the production of evidence satisfactory to the Commissioner of Internal Revenue, that such
persons are actually coming to settle in the Philippines and that the change of residence is bonafide;
e. Services subject to percentage tax under Title V of the Code, as amended;
f. Services by agricultural contract growers and milling for others of palay into rice, corn into grits, and sugar cane
into raw sugar;
g. Medical, dental, hospital and veterinary services except those rendered by professionals;
h. Educational services rendered by private educational institutions duly accredited by the Department of Education
(DepED), the Commission on Higher Education (CHED) and the Technical Education and Skills Development
Authority (TESDA) and those rendered by the government educational institutions;
i. Services rendered by individuals pursuant to an employer-employee relationship;
j. Services rendered by regional or area headquarters established in the Philippines by multinational corporations
which act as supervisory, communications and coordinating centers for their affiliates, subsidiaries or branches in the
Asia-Pacific Region and do not earn or derive income from the Philippines;
k. Transactions which are exempt under international agreements to which the Philippines is a signatory or under
special laws except those granted under P.D. No. 529 - Petroleum Exploration Concessionaires under the Petroleum
Act of 1949;
l. Sales by agricultural cooperatives duly registered and in good standing with the Cooperative Development
Authority (CDA) to their members, as well as of their produce, whether in its original state or processed form, to
non-members, their importation of direct farm inputs, machineries and equipment, including spare parts thereof, to
be used directly and exclusively in the production and/or processing of their produce;
m. Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered and in good
standing with the Cooperative Development Authority;
n. Sales by non-agricultural, non-electric and non-credit cooperatives duly registered with and in good standing with
CDA; Provided, that the share capital contribution of each member does not exceed Fifteen Thousand Pesos
(P15,000.00) and regardless of the aggregate capital and net surplus ratably distributed among the members;
o. Export sales by persons who are not VAT-registered;
p. The following sales of real properties are exempt from VAT, namely:
1. Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of
trade or business;
2. Sale of real properties utilized for low-cost housing as defined by RA No. 7279, otherwise known as the
"Urban Development and Housing Act of 1992" and other related laws, such as RA No. 7835 and RA No. 8763;
3. Sale of real properties utilized for specialized housing as defined under RA No. 7279, and other related laws,
such as RA No. 7835 and RA No. 8763, wherein price ceiling per unit is P225,000.00 or as may from time to
time be determined by the HUDCC and the NEDA and other related laws;
4. Sale of residential lot valued at One Million Five Hundred Thousand Pesos (P1,500,000.00) and below, or
house and lot and other residential dwellings valued at Two Million Five Hundred Thousand Pesos
(P2,500,000.00) and below where the instrument of sale/ transfer/ disposition was executed on or after July 1,
2005; Provided, that not later than January 31, 2009 and every three (3) years thereafter, the amounts stated
herein shall be adjusted to its present value using the Consumer Price Index, as published by the National
Statistics Office (NSO); Provided, further, that such adjustment shall be published through revenue regulations
to be issued not later than March 31 of each year.
q. Lease of residential units with a monthly rental per unit not exceeding Ten Thousand Pesos (P10,000.00),
regardless of the amount of aggregate rentals received by the lessor during the year; Provided, that not later than
January 31, 2009 and every three (3) years thereafter, the amount of P10,000.00 shall be adjusted to its present value
using the Consumer Price Index, as published by the NSO;
r. Sale, importation, printing or publication of books and any newspaper, magazine, review or bulletin which appears
at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication
of paid advertisements;
s. Sale, importation or lease of passenger or cargo vessels and aircraft, including engine equipment and spare parts
thereof for domestic or international transport operations; Provided, that the exemption from VAT on the importation
and local purchase of passenger and/or cargo vessels shall be limited to those of one hundred fifty (150) tons and
above, including engine and spare parts of said vessels; Provided, further, that the vessels to be imported shall
comply with the age limit requirement, at the time of acquisition counted from the date of the vessel's original
commissioning, as follows: (a) for passenger and/or cargo vessel, the age limit is fifteen (15) years old, (b) for
tankers, the age limit is ten (10) year old, and (c) for high-speed passengers crafts, the age limit is five (5) years old;
Provided, finally, that exemption shall be subject to the provisions of Section 4 of Republic Act No. 9295, otherwise
known as "The Domestic Shipping Development Act of 2004";
t. Importation of life-saving equipment, safety and rescue equipment and communication and navigational safety
equipment, steel plates and other metal plates including marine-grade aluminum plates, used for shipping transport
operations; Provided, that the exemption shall be subject to the provisions of Section 4 of Republic Act No. 9295,
otherwise known as "The Domestic Shipping Development Act of 2004".
u. Importation of capital equipment, machinery, spare parts, life-saving and navigational equipment, steel plates and
other metal plates including marine-grade aluminum plates to be used in the construction, repair, renovation or
alteration of any merchant marine vessel operated or to be operated in the domestic trade. Provided, that the
exemption shall be subject to the provisions of Section 19 of Republic Act No. 9295, otherwise known as the "The
Domestic Shipping Development Act of 2004".
v. Importation of fuel, goods and supplies engaged in international shipping or air transport operations; Provided,
that the said fuel, goods and supplies shall be used exclusively or shall pertain to the transport of goods and/or
passenger from a port in the Philippines directly to a foreign port, or vice-versa, without docking or stopping at any
other port in the Philippines unless the docking or stopping at any other Philippine port is for the purpose of
unloading passengers and/or cargoes that originated form abroad, or to load passengers and/or cargoes bound for
abroad; Provided, further, that if any portion of such fuel, goods or supplies is used for purposes other that the
mentioned in the paragraph, such portion of fuel, goods and supplies shall be subject to 12% VAT;
w. Services of banks, non-bank financial intermediaries performing quasi-banking functions, and other non-bank
financial intermediaries, such as money changers and pawnshops, subject to percentage tax under Sections 121 and
122, respectively of the Tax Code; and
x. Sale or lease of goods or properties or the performance of services other than the transactions mentioned in the
preceding paragraphs, the gross annual sales and/or receipts do not exceed the amount of One Million Five Hundred
Thousand Pesos (P1,500,000.00). Provided, that not later than January 31, 2009 and every three (3) years thereafter,
the amount of P1,500,000.00 shall be adjusted to its present value after using the Consumer Price Index, as published
by the NSO.
What are the previously exempt transactions that are now subject to VAT?
 Medical services such as dental & veterinary services rendered by professionals;

 Legal services;
 Non-food agricultural products;
 Marine and forest products;
 Cotton and cotton seeds;
 Coal and natural gas;
 Petroleum products;
 Passenger cargo vessels of more than 5,000 tons;
 Work of art, literary works, musical composition;
 Generation, transmission and distribution of electricity including that of electric cooperatives;
 Sale of residential lot valued at more than P1,500,000.00;
 Sale of residential house & lot/dwellings valued at more than P2,500,000.00;
 Lease of residential unit with a monthly rental of more than P10,000;
II. RELIEF-Related Queries
What is "RELIEF"?
RELIEF means Reconciliation of Listing for Enforcement. It supports the third party information program of the
Bureau through the cross referencing of third party information from the taxpayers' Summary Lists of Sales and
Purchases prescribed to be submitted on a quarterly basis.
Who are required to submit Summary List of Sales?
VAT taxpayers with quarterly total sales/receipts (net of VAT), exceeding Two Million Five Hundred Thousand
Pesos (P2,500,000.00) are required to submit a Summary List of Sales.
Who are required to submit Summary List of Purchases?
VAT taxpayers with quarterly total purchases (net of VAT) of goods and services, including importation exceeding
One Million Pesos (P1,000,000.00) are required to submit Summary List of Purchases.
What are the Summary Lists required to be submitted?

 Quarterly Summary List of Sales to Regular Buyers/ Customers Casual Buyers/ Customers and Output
Tax
 Quarterly Summary of List of Local Purchases and Input tax; and
 Quarterly Summary List of Importation.
When is the deadline for submission of the above Summary Lists?
The Summary List of Sales/Purchases, whichever is applicable, shall be submitted on or before the twney-fifth (25th)
day of the month following the close of the taxable quarter -- calendar quarter or fiscal quarter.
What are the penalties for failure to submit the Summary Lists?

 For failure to file, keep or supply a statement, list or information required on the date prescribed shall pay
and administrative penalty of One Thousand Pesos (P1,000.00) for each such failure, unless it is shown
that such failure is due to reasonable cause and not to willful neglect; and
 An aggregate amount to be imposed for all such failures during a taxable year shall not exceed Twenty-
Five Thousand Pesos (P25,000.00).
III. What is the treatment for Withholding of VAT on Government Money Payments?

 The goverment or any of its political subdivisions, instrumentalities or agencies, including government-
owned or controlled corporations (GOCCs) shall, before making payment on account of each purchase of
goods and/or services taxed at twelve percent (12%) VAT pursuant to Sections 106 and 108 of the Tax
Code, deduct and withhold a Final VAT due at the rate of five percent (5%) of the gross payment.
The five percent (5%) final VAT withholding rate shall represent the net VAT payable of the seller. The remaining
seven percent (7%) effectively accounts for the standard input VAT for sales of goods or services to government or
any of its political subdivisions, instrumentalities or agencies including GOCCs in lieu of the actual input VAT
directly attributable or ratably apportioned to such sales. Should actual input VAT attributable to sales to government
exceeds seven percent (7%) of gross payments, the excess may form part of the sellers' expense or cost. On the other
hand, if actual input VAT attributable to sale to government is less than seven percent (7%) of gross payment, the
difference must be closed to expense or cost.

 The government or any of its political subdivisions, instrumentalities or agencies including GOCCs, as
well as private corporation, individuals, estates and trusts, whether large or non-large taxpayers, shall
withhold twelve percent (12%) VAT with respect to the following payments:
1. Lease or use of properties or property rights owned by non-residents; and
2. Other services rendered in the Philippines by non-residents.
IV. In what grounds can the Commissioner of Internal Revenue suspend the business operations of a taxpayer?
The Commissioner or his authorized representative is empowered to suspend the business operations and temporarily
close the business establishment of any person for any of the following violations:
(a) In the case of a VAT-registered Person:

 Failure to issue receipts or invoices;
 Failure to file a value-added-tax return as required under Section 114; or
 Understatement of taxable sales or receipts by thirty percent (30%) or more of his correct
taxable sales or receipts for the taxable quarter.
(b) Failure to any Person to Register as Required under Section 236

 The temporary closure of the establishment shall be for the duration of not less than five (5)
days and shall be lifted only upon compliance with whatever requirements prescribed by the
Commissioner in the closure order.
Tax Reminders
PERCENTAGE TAX
Description
Percentage tax is a business tax imposed on persons or entities/transactions:
a.
1. 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 Php 1,919,500 and who are not VAT-registered; and
2. Engaged in the following industries/ transactions:
a. Cars for rent or hire driven by the lessee, transportation contractors, including persons who transport
passengers for hire, and other domestic carriers of passengers by land (except owners of animal-drawn
two-wheeled vehicle) and keepers of garages
b. International air/shipping carriers doing business in the Philippines on their gross receipts derived from
transport of cargo from the Philippines to another country
c. Franchise grantees of –
▪ radio and/or television broadcasting whose gross annual receipts for the preceding year do not exceed Php
10,000,000.00 and did not opt to register as VAT taxpayers
▪ gas and water utilities
d. Overseas dispatch, message or conversation transmitted from the Philippines, except those transmitted by the Philippine
government, any embassy and consular offices of a foreign government, public international organizations enjoying
exemptions pursuant to an international agreement and news messages to a bona fide correspondent furnishing general
news service
e. Banks and non-bank financial intermediaries performing quasi-banking functions
f. Other non-bank financial intermediaries (including pawnshops)
g. Person, company or corporation (except purely cooperative companies or associations) doing life insurance business
h. Fire, marine or miscellaneous agents of foreign insurance companies
i. Proprietor, lessee or operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball
games, Jai-Alai and racetracks, including videoke bars, karaoke bars, karaoke televisions, karaoke boxes and music
lounges
j. Winnings in horse races
k. Sale, barter or exchange of shares of stock listed and traded through the local stock exchange or through initial public
offering
Who are required to file Percentage Tax Returns monthly?
Every person/entity subject to percentage tax as enumerated in items 1, 2.a, 2.b, 2.c, 2.e, 2.f, 2.g and 2.h above
Who are required to file Percentage Tax Returns quarterly?
1.
1. Operator, manager or person in charge of:
 cockpits,
 cabarets, day or night clubs, videoke bars, karaoke bars, karaoke televisions, karaoke boxes and music loun
 boxing exhibitions
 professional basketball games
 Jai-alai and race tracks
2. Telephone and communication companies on their overseas dispatch, message or conversation originating
and transmitted from the Philippines
Monthly Percentage Tax
Tax Form
BIR Form 2551M - Monthly Percentage Tax Return
1. Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
3. For amended return, proof of payment and the return previously filed
4. Authorization letter, if filed by an authorized representative
Procedures
1. Fill-up BIR Form 2551M in triplicate copies

 Proceed to any Authorized Agent Bank (AAB) located within the territorial jurisdiction of the Revenue
District Office (RDO) where the taxpayer is registered and present the duly accomplished BIR Form
2551M, together with the required attachments and payment. The Percentage Tax shall be paid at the time
the return is filed by the taxpayer.
 In places where there are no AABs, the duly accomplished BIR Form 2551M, together with the required
attachments and payment, shall be filed/paid with the Revenue Collection Officer (RCO) or duly authorized
Treasurer of the city or municipality where said business or principal place of business is located.
 Receive the taxpayer's copy of BIR Form 2551M duly validated/stamp-received by the
AAB/RCO/authorized City or Municipal Treasurer.
For eFPS filers, you may click this Job Aid in filing and payment thru said system.

 Proceed to the RDO where the taxpayer is registered or with the concerned RCO and present the duly
accomplished BIR Form 2551M, together with the required attachments.
 Receive the taxpayer's copy of BIR Form 2551M duly stamp-received by the RDO representative.
Note: "No payment" returns filed late shall be imposed the necessary penalties by the RDO, which shall be paid at the
concerned AAB.
When to File/Pay
 Manual Filing
Within twenty (20) days following the end of each month
 Electronic Filing
For taxpayers enrolled with the Electronic Filing and Payment System (eFPS), in accordance with the schedule
set forth in RR No. 26-2002 as follows:
 Group A : Twenty five (25) days following the end of the month
 Group B : Twenty four (24) days following the end of the month
 Group C : Twenty three (23) days following the end of the month
 Group D : Twenty two (22) days following end the of the month
 Group E : Twenty one (21) days following the end of the month
Quarterly Percentage Tax
Tax Form
BIR Form 2551Q - Quarterly Percentage Tax Return
Procedures
1. Fill-up BIR Form 2551Q in triplicate copies.

 Proceed to any AAB located within the territorial jurisdiction of the RDO where the taxpayer is registered
and present the duly accomplished BIR Form 2551Q, together with the required attachments and
payment. The Percentage Tax shall be paid at the time the return is filed by the taxpayer.
 In places where there are no AABs, the duly accomplished BIR Form 2551Q, together with the required
attachments and payment, shall be filed/paid with the RCO or duly Authorized Treasurer of the city or
municipality where said business or principal place of business is located.
 Receive the taxpayer's copy of BIR Form 2551Q duly validated/stamp-received by the
AAB/RCO/authorized City or Municipal Treasurer.
For eFPS filers, you may click this Job Aid in filing and payment thru said system
 Proceed to the Revenue District Office where the taxpayer is registered or with the concerned RCO and
present the duly accomplished BIR Form 2551Q, together with the required attachments.

 Receive the taxpayer's copy of BIR Form 2551Q duly stamp-received by the RDO representative.
Note: "No payment" returns filed late shall be imposed the necessary penalties by the RDO, which shall be paid at the
concerned AAB.
When to File/Pay
 Manual Filing
Within twenty (20) days after the end of each taxable quarter
 Electronic Filing
Within twenty (20) days after the end of each taxable quarter
Percentage Tax Return For Transactions Involving Shares of Stocks Listed and Traded Through the Local Stocks
Exchange or Through Initial and/or Secondary Offering
Tax Form
BIR Form 2552 - Percentage Tax Return for Transactions Involving Shares of Stocks Listed and Traded Through the
Local Stocks Exchange or Through Initial and/or Secondary Public Offering
2. Proof of Exemption for transactions not subject to tax, if applicable
Procedures
1. Fill-up BIR Form 2552 in triplicate copies.

 Proceed to any AAB located within the territorial jurisdiction of the RDO where the local stock exchange
is located and present the duly accomplished BIR Form 2552, together with the required attachments and
payment. The Percentage Tax shall be paid at the time the return is filed by the taxpayer.
 Receive the BIR Form 2552 taxpayer's copy duly validated and stamp-received by the teller of the AAB
Electronic Filing
For eFPS filers, you may click this Job Aid in filing and payment thru said system.

 Proceed to the RDO having jurisdiction over the local stock exchange and present the duly accomplished
BIR Form 2552, together with the required attachments.
 Receive the BIR Form 2552 taxpayer's copy duly stamp received by the RDO representative.
Note: "No payment" returns filed late shall be imposed the necessary penalties by the RDO, which shall be paid at
the concerned AAB.
When to File/Pay
 For tax on sale of shares of stocks listed and traded through the local stock exchange (LSE) – within five (5)
banking days from the date of collection
 For tax on shares of stocks sold or exchanged through primary offering - within 30 days from the date of listing in
the LSE
 For tax on shares of stocks sold or exchanged through secondary public offering - within five (5) banking days
from the date of collection
Tax Rates
Coverage Basis Tax Rate

Persons exempt from VAT under Sec. 116 Gross Sales or Receipts 3%
Domestic carriers and keepers of garages Gross Receipts 3%
International Carriers:
International air/shipping carriers doing business in the Gross Receipts 3%
Philippines
Franchise Grantees:
Electric , gas and water utilities Gross Receipts 2%
Radio and television broadcasting companies whose Gross Receipts 3%
annual gross receipts of the preceding year do not exceed
P 10,000,000 and did not opt to register asVAT taxpayer
Banks and non-bank financing intermediaries Interest, commissions and discounts from lending
activities as well as income from leasing on the basis
of remaining maturities of instruments:
• Short term maturity (not over 2 years) 5%
• Medium term maturity (over 2 years but not over 4 3%
years)
• Long term maturity
ο Over 4 years but not over 7 years 1%
ο Over 7 years 0%
On Dividends 0%
On royalties, rentals of properties, real or personal, 5%
profits from exchange and all other items treated as
gross income under Sec. 32 of the Code
Finance Companies On interest, discounts and other items of gross 5%
income paid to finance companies and other financial
intermediaries not performing quasi banking
functions
Interest, commissions and discounts paid from their
loan transactions from finance companies as well as
income from financial leasing shall be taxed based
on the remaining maturities of instruments:
• Short term maturity (not over 2 years) 5%
• Medium term (over 2 years but not over 4 years) 3%
• Long Term Maturity
ο Over 4 years but not over 7 years 1%
ο Over 7 years 0%
Life Insurance Companies (except purely cooperative Total premiums collected 5%
companies or associations)
Agents of foreign insurance companies: (except
reinsurance premium)
Total premium collected 10%
Total premium collected 5%
Proprietors, lessee or operator of the following:
Cockpits Gross receipts 18%
Cabarets, Night or Day Clubs Gross receipts 18%
Boxing exhibitions Gross receipts 10%
Professional basketball games Gross receipts 15%
Jai-alai and race track (operators shall withheld tax on Gross receipts 30%
winnings)
Every stock broker who effected a sale, barter, exchange Gross selling price or gross value in money of shares ½ of 1%
or other disposition of shares of stock listed and traded of stocks sold, bartered, exchanged or otherwise
through the Local Stock Exchange (LSE) other than the disposed
sale by a dealer in securities
A corporate issuer/stock broker, whether domestic of Gross selling price or gross value of in money of
foreign, engaged in the sale, barter, exchange or other shares of stocks sold, bartered, exchanged or
disposition through Initial Public Offering otherwise disposed in accordance with the
(IPO)/secondary public offering of shares of stock in proportion of stocks sold, bartered or exchanged or
closely held corporations after listing in the stock exchange
• Up to 25 % 4%
• Over 25% but not over 33 1/3% 2%
• Over 33 1/3 % 1%
EXCISE TAX
BASIC CONCEPT:
 Excise Tax is a tax on the production, sale or consumption of a commodity in a country.
APPLICABILITY:
 On goods manufactured or produced in the Philippines for domestic sale or consumption or for any other
disposition; and
 On goods imported.
TYPES OF EXCISE TAX:
 Specific Tax – refers to the excise tax imposed which is based on weight or volume capacity or any other physical
unit of measurement
 Ad Valorem Tax – refers to the excise tax which is based on selling price or other specified value of the
goods/articles
MANNER OF COMPUTATION:
 Specific Tax = No. of Units/other measurements x Specific Tax Rate

 Ad Valorem Tax = No. of Units/other measurements x Selling Price of any specific value per unit x Ad Valorem
Tax Rate
MAJOR CLASSIFICATION OF EXCISABLE ARTICLES AND RELATED CODAL SECTION:
1. Alcohol Products (Sections 141-143)
a. Distilled Spirits (Section 141)

b. Wines (Section 142)
c. Fermented Liquors (Section 143)
2. Tobacco Products (Sections 144-146)
a. Tobacco Products (Section 144)

b. Cigars & Cigarettes (Section 145)
c. Inspection Fee (Section 146)
3. Petroleum Products (Section 148)
4. Miscellaneous Articles (Section 149-150)
a. Automobiles (Section 149)

b. Non-essential Goods (Section 150)
5. Mineral Products (Sections 151)
PERSONS LIABLE TO EXCISE TAX:
In General:
a. On Domestic or Local Articles



 Manufacturer
 Producer
 Owner or person having possession of articles removed from the place of production without the
payment of the tax
b. On Imported Articles


 Importer
 Owner
 Person who is found in possession of articles which are exempt from excise taxes other than those
legally entitled to exemption
Others:
On Indigenous Petroleum


 Local Sale, Barter or Transfer
o
o First buyer, purchaser or transferee
 Exportation
o
o Owner, lessee, concessionaire or operator of the mining claim
TIME OF PAYMENT:
In General
o

 On domestic products
o
o Before removal from the place of production
 On imported products
o
o Before release from the customs' custody
EXCISE TAX RATES:
A. ALCOHOL PRODUCTS
NEW TAX RATES based on Republic Act No. 10351 Remarks

PARTICULARS 2018
2013 2014 2015 2016 2017 onwards
A. DISTILLED SPIRITS, AD VALOREM & SPECIFIC TAX
1) AD VALOREM TAX RATE
- Based on the Net Retail Price
(NRP) per proof (excluding the 15% 15% 20% 20% 20% 20%
excise and value-added taxes);
and
Effective
1/1/2016, the
specific tax rate
2) SPECIFIC TAX - Per proof
Php20 Php20 Php20 Php20.80 Php21.63 shall be
liter
increased by
4% every year
thereafter
B. WINES, per liter of volume capacity
1) Sparkling wines/ champagnes,
where the NRP (excluding the
excise and VAT) per bottle of
750ml volume capacity,
regardless of proof is:
Php500.00 or less Php250 Php260 Php270.40 Php281.22 Php292.47
Effective
More than Php500.00 Php700 Php728 Php757.12 Php787.40 Php818.90 1/1/2014, the
2) Still wines and carbonated specific tax rate
wines containing 14% of alcohol Php30.00 Php31.20 Php32.45 Php33.75 Php35.10 shall be
by volume or less increased by
4% every year
3) Still wines and carbonated thereafter
wines containing more than 14%
Php60.00 Php62.40 Php64.90 Php67.50 Php70.20
(of alcohol by volume) but not
more 25% of alcohol by volume
4) Fortified wines containing
more than 25% of alcohol by Taxed as distilled spirits
volume
C. FERMENTED LIQUORS , per liter of volume capacity
1) If the NRP (excluding excise Effective
and VAT) per liter of volume 1/1/2018, the
capacity is: specific tax rate
shall be
Php 50.60 and below Php15.00 Php17.00 Php19.00 Php21.00 Php23.50
increased by
4% every year
More than Php 50.60 Php20.00 Php21.00 Php22.00 Php23.00 Php23.50 thereafter
2) If brewed and sold at Effective
microbreweries or small Php28.00 Php29.12 Php30.28 Php31.50 Php32.76 1/1/2014, the
establishments such as pubs and specific tax rate
restaurants, regardless of the shall be
NRP increased by
4% every year
thereafter
NOTE:
IN CASE OF FERMENTED LIQUORS AFFECTED BY THE "NO DOWNWARD RECLASSIFICATION "
PROVISION, THE 4% INCREASE SHALL APPLY TO THEIR RESPECTIVE APPLICABLE TAX RATES
B. TOBACCO PRODUCTS
NEW TAX RATES based on Republic Act No. 10351 Remarks

PARTICULARS 2018
2013 2014 2015 2016 2017 onwards
A. TOBACCO PRODUCTS, per kilogram
1. Tobacco Products
(a) Tobacco twisted by hand or
reduced into a condition to be
consumed in any manner other than Php1.75 Php1.82 Php1.89 Php1.97 Php2.05
the ordinary mode of drying and
Effective
curing;
1/1/2014, the
(b) Tobacco prepared or partially specific tax rate
prepared with or without the use of shall be
any machine or instrument or Php1.75 Php1.82 Php1.89 Php1.97 Php2.05 increased by 4%
without being pressed or sweetened; every year
and thereafter
(c) Fine-cut shorts and refuse,
scraps, clippings, cuttings, stems, Php1.75 Php1.82 Php1.89 Php1.97 Php2.05
midribs and sweepings of tobacco;
2. Chewing tobacco unsuitable for
Php1.50 Php1.56 Php1.62 Php1.68 Php1.75
use in any other manner
B. CIGARS, per cigar
3. Cigars Effective
(a) Based on the NRP per cigar 1/1/2014, the
(excluding the excise and value- 20% 20% 20% 20% 20% specific tax rate
added taxes), and shall be
increased by 4%
every year
(b) Per cigar Php5.00 Php5.20 Php5.41 Php5.62 Php5.85
thereafter
C. CIGARETTES , per pack
Effective
1/1/2018, the
specific tax rate
1. Cigarettes packed by hand Php12.00 Php15.00 Php18.00 Php21.00 Php30.00 shall be
increased by 4%
every year
thereafter
2. Cigarettes packed by machine,
where the NRP (excluding excise
and VAT) per pack is:
(a) Php11.50 and below Php12.00 Php17.00 Php21.00 Php25.00 Php30.00
(b) More than Php11.50 Php25.00 Php27.00 Php28.00 Php29.00 Php30.00
INSPECTION FEE - There shall be collected inspection fees on leaf tobacco, scrap, cigars, Cigarettes and other
manufactured tobacco and tobacco products as follows:
PRODUCT TYPE INSPECTION FEE

(1) Cigars P 0.50 per thousand pieces or fraction thereof
(2) Cigarettes P 0.10 per thousand sticks or fraction thereof
(3) Leaf Tobacco P 0.02 per kilogram or fraction thereof
(4) Scrap and other manufactured tobacco P 0.03 per kilogram or fraction thereof
C. PETROLEUM PRODUCTS
PRODUCT TYPE TAX RATES

Lubricating oils and greases, including but not limited to base stock for lube oils P 4.50 per liter
and greases, high vacuum distillates, aromatic extracts and other similar
preparations, and additives for lubricating oils and greases, whether such
additives are petroleum based or not
Processed gas P 0.05 per liter
Waxes and petrolatum P 3.50 per kilogram
Denatured alcohol, if used for motive power [i.e. one hundred eighty (180) proof P 0.05 per liter
ninety percent (90%) absolute alcohol]. Provided, that unless otherwise provided
by special laws, if the denatured alcohol is mixed with gasoline, the excise tax
which has already been paid, only the alcohol content shall be subject to tax
Naphtha, regular gasoline and other similar products of distillation P 4.35 per liter
Naphtha used as raw material in the production of petrochemical products or as P 0.00 per liter
replacement fuel for natural gas-fired combined cycle power plant, in lieu of
locally-extracted natural gas during the non-availability thereof
Leaded premium gasoline P 5.35 per liter
Unleaded premium gasoline P 4.35 per liter
Aviation turbo jet fuel P 3.67 per liter
Kerosene P 0.00 per liter
Kerosene used as aviation fuel P 3.67 per liter
Diesel fuel oil, and on similar fuel oils having more or less the same generating P 0.00 per liter
power
Liquefied Petroleum Gas ; Provided, that if used for motive power, it shall be P 0.00 per liter
taxed at the equivalent rate as the Excise Tax on diesel fuel oil
Asphalt P 0.56 per kilogram
Bunker fuel oil, and on similar fuel oils having more or less the same generating P 0.00 per liter
power
D. MINERALS AND MINERAL PRODUCTS

PRODUCT TYPE TAX RATES
On coal and coke Ten Pesos (P10.00) per metric ton
All mineral and mineral products (non-metallic), quarry Two percent (2%) bases on the actual market value, in
resources the case of those locally-extracted or produced; and, in
the case of importation or the value used by the Bureau
of Customs in determining tariff and customs duties, net
of Excise Tax and Value-Added Tax.
On locally-extracted natural gas and liquefied natural gas P0.00
On indigenous petroleum Three percent (3%) of the fair international market price
thereof
NOTE:
In the case of mineral concentrates not traded in commodity exchanges in the Philippines or abroad, such as copper
concentrate, the actual market value shall be the world price quotations of the refined mineral products content thereof
prevailing in the said commodity exchanges, after deducting the smelting, refining and other charges incurred in the
process of converting the mineral concentrates into refined metal traded in those commodity exchanges.
On minerals and mineral products sold or consigned abroad, the actual cost of ocean freight and insurance shall be
deducted from the tax base.
E. AUTOMOBILES AND OTHER MOTOR VEHICLES
OVER UP TO RATE
0 P 600,000 2%
P600,000 P 1,100,000 P 12,000 + 20% in excess of P 600,000
P1,100,000 P2,100,000 P112,000+ 40% in excess of P1,100,000
P2,100,000 over P512,000 + 60% in excess of P2,100,000
F. NON-ESSENTIAL GOODS

 Twenty percent (20%) based on the wholesale price or the value of importation used by the Bureau of
Customs in determining Tariff and Customs Duties, net of Excise and Value-Added taxes
[return to index]
I. RELATED REVENUE ISSUANCES
A. ALCOHOL PRODUCTS
RMC 18-2013 Further Clarifying the Taxability of Distilled Spirits Provided under Revenue Memorandum Circular No.
3-2013
RMC 3-2013 Clarifying Certain Provisions of Revenue Regulations No. 17-2012 Implementing the Provisions of
Republic Act No. 10351 as well as the Provisions of Revenue Memorandum Circular No. 90-2012
Providing the Initial Tax Classifications of Alcohol and Tobacco Products
RMC 90-2012 Revised Tax Rates of Alcohol and Tobacco Products Under Republic Act No. 10351
RR 17-2012 Prescribing the Implementing Guidelines on the Revised Tax Rates on Alcohol and Tobacco Products
Pursuant to the Provisions of Existing Revenue Regulations
RR 2-97 Revenue Regulations Governing Excise Taxation on Distilled Spirits, Wines and Fermented Liquors
pursuant to the Provisions of Republic Act No. 9334, and Clarifying Certain Provisions of Existing
Revenue Regulations Relative Thereto
B. TOBACCO PRODUCTS
RMO 23-2013 Guidelines and Procedures for the Implementation of the Electronic Official Register Book (eORB)
System
RR 3-2013 Prescribing the Use of Electronic Official Register Book for Manufacturers of Tobacco Products and
Regulated Raw Materials
RMC 3-2013 Clarifying Certain Provisions of Revenue Regulations No. 17-2012 Implementing the Provisions of
Republic Act No. 10351 as well as the Provisions of Revenue Memorandum Circular No. 90-2012
Providing the Initial Tax Classifications of Alcohol and Tobacco Products
RMC 90-2012 Revised Tax Rates of Alcohol and Tobacco Products Under Republic Act No. 10351
Pursuant to the Provisions of Existing Revenue Regulations
pursuant to the Provisions of Republic Act No. 9334, and Clarifying Certain Provisions of Existing
Revenue Regulations Relative Thereto
RR 1-97 Revenue Regulations Governing the Excise Taxation of Cigars and Cigarettes
C. Petroleum Products
RMC 50-2014 Reiteration and Clarification on the Requirement of Issuance of Withdrawal Certificate for Every
Removal of Petroleum or Petroleum Products
RR 2-2012 Tax Administration Treatment of Petroleum and Petroleum Products Imported into the Philippines
Including those Coming in Through Freeport Zones and Economic Zones and Registration of All Storage
Tanks, Facilities, Depots and Terminals
RR 8-2006 Prescribing the Implementing Guidelines on the Taxation and Monitoring of the Raw Materials Used and
the Bioethanol-Blended Gasoline (E-Gasoline) Produced under the Fuel Bioethanol Program of the
Department of Energy (DOE)
RR 8-96 An Act Restructuring the Excise Tax on Petroleum Products, Reclassifying Natural Gas and Liquefied
Natural Gas under Non-Metallic Mineral and Quarry Resources and Reducing the Excise Tax on
Indigenous Petroleum
RR 13-77 Petroleum Products Regulation
D. Miscellaneous Articles
D.1 automobiles:
RMO 21-2013 Amending the Provisions of Revenue Memorandum Order (RMO) No. 35-2002, as Amended by RMO
No. 20-2006 Prescribing the Guidelines and Procedures in the Processing and Issuance of Authority to
Release Imported Goods (ATRIG) for Excise Tax Purposes
RMO 20-2006 Amendment to Certain Sections of RMO No. 35-2002
RMC 60-2003 Clarifying Certain Issues Raised Relative to the Implementation of Revenue Regulations No. 25-2003
Governing the Imposition of Excise Tax on Automobiles Pursuant to Republic Act No. 9224
RR 25-2003 Amended Revenue Regulations Governing the Imposition of Excise Tax on Automobiles pursuant to the
Provisions of Republic Act No. 9224, an Act Rationalizing the Excise Tax on Automobiles, Amending for
the Purpose the NIRC of 1997, and for Other Purposes
RR 4-2003 Amending Certain Section of Revenue Regulations No. 14-97, as Amended by Revenue Regulations No.
14-99, Otherwise Known as the Revenue Regulations Governing the Imposition of Excise Tax on
Automobiles
RR 14-99 Amending Section 2 of Revenue Regulations No. 14-97 Otherwise known as Revenue Regulations
Governing the Imposition of Excise Taxes on Automobiles and Other Motor Vehicles
RR 14-97 Revenue Regulations Governing the Imposition of Excise Tax on Automobiles and Other Motor Vehicles
D.2 NON-ESSENTIAL GOODS:
RMC 33-2004 Revised Rules and Regulations Implementing Republic Act No. 8502, Otherwise Known As The “Jewelry
Industry Development Act Of 1998”
RMC 17-2002 Green Cross Baby Cologne and All Other Cologne Products
RR 1-99 Rules and Regulations Implementing the Tax Incentives Provided under Section 3 (b) and (d) of Republic
Act No. 8502 Otherwise known as the “Jewelry Industry Development Act of 1998”
RR 8-84 Cosmetic Products Regulations
E. MINERAL PRODUCTS
RR 7-2008 Taxation on the Sale to the Bangko Sentral ng Pilipinas of Gold and Other Metallic Mineral Products
Extracted or Produced by Small-scale Miners and further Amending Section 2.57.2 (t) of Revenue
Regulations No. 2-98, as amended
RR 13-94 Revenue Regulations Governing the Imposition of Excise Tax on Minerals and Mineral Products
F. OTHERS (COMMON ISSUANCES FOR ALL EXCISABLE PRODUCTS)
RMO 14-2014 Guidelines and Procedures for the Processing and Issuance of An Electronic Authority to Release
Imported Goods (eATRIG) for Excise Tax Purposes
RMC 10-2013 Transition Procedures for all Electronic Filing and Payment System (eFPS) Filers in Filing Tax Returns
Affected by the Revised Tax Rates on Alcohol and Tobacco Products Pursuant to the provisions of
Republic Act No. 10351, “An Act Restructuring the Excise Tax on Alcohol and Tobacco Products by
Amending Sections 141, 142, 143, 144, 145, 8, 131 and 288 of Republic Act No. 8424, Otherwise Known
as the National Internal Revenue Code of 1997, as Amended by republic Act No. 9334, and for Other
Purposes
RMO 38-2003 Prescribing Uniform Guidelines and Procedures in the Processing of Various Permits for Excise Tax
Purposes
RMO 35-2002 Prescribing the Guidelines and Procedures in the Processing and Issuance of Authority to Release
Imported Goods (ATRIG) for Excise and Value-Added Tax Purposes
[return to index]
II. CODAL REFERENCE:

SECTION IN THE NIRC OF 1997,
PARTICULAR
AS AMENDED
ALCOHOL PRODUCTS 141-143
TOBACCO PRODUCTS 144-147
PETROLEUM PRODUCTS 148
MISCELLANEOUS ARTICLES 149-150
MINERAL PRODUCTS 151
DOCUMENTARY TAX
Description
Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers evidencing the acceptance,
assignment, sale or transfer of an obligation, right or property incident thereto.
Tax Forms
BIR Form 2000 (Documentary Stamp Tax Declaration Return);
BIR Form 2000-OT Documentary Stamp Tax Declaration Return (ONE- TIME TRANSACTIONS)
1) Photocopy of document(s) to which the documentary stamp shall be affixed, in case of constructive affixture of
Documentary Stamp Tax
2) Proof of exemption under special law, if applicable
3) Duly approved Tax Debit Memo, if applicable
4) Proof of payment of documentary stamp tax paid upon the original issue of the stock, if applicable.
5) Special Power of Attorney (SPA) from the transacting party if the latter is not one of the parties to the Deed of Transfer
Tax Rates
Tax Document Taxable Unit Tax Due Per % of Taxable Base

Code Unit Unit
Section
174 Original Issue of P200.00 or 1.00 .5% Par value of shares of
Shares of Stock with fraction thereof stocks
par value
Actual consideration
Original Issue of P200.00 or 1.00 .5% for the issuance of
Shares of Stock fraction thereof shares of stocks
without par value
Actual value
represented by each
share
Stock Dividend P200.00 or 1.00 .5%

fraction thereof
175 Sales, Agreements to P200.00 or .75 3.75% Par value of such stock
Sell, Memoranda of fraction
Sales, Deliveries or thereof
Transfer of Shares
or Certificates of
Stock
DST paid upon the
Stock without par 25% original issuance of
value said stock.
176 Bonds, Debentures, P200.00 or .75 3.75% Par value of such
Certificate of Stock or fraction bonds, debentures,
Indebtedness issued in thereof Certificate of Stock or
foreign Countries Indebtedness
177 Certificate of Profits P200.00 or .50 .25% Face value of such
or Interest in Property fraction thereof certificate /
or Accumulation memorandum
178 Bank Checks, Drafts, On each 1.50
Certificate of Deposit Document
not bearing
interest and other
Instruments
179 All Debt Instruments P200.00 or 1.00 .5% Issue price of any such
fraction thereof instruments
180 All Bills of Exchange P200.00 or .30 .15% Face value of any such
or Drafts fraction thereof bill of exchange or
draft
181 Acceptance of Bills of P200.00 or .30 .15% Face value of such bill
Exchange or order fraction thereof of exchange or order or
for the payment of the
money purporting to Philippine equivalent
be drawn in of such value, if
a foreign country but expressed in foreign
payable in the currency
Philippines
182 Foreign Bills of P200.00 or .30 .15% Face value of such bill
Exchange and Letters fraction thereof of exchange or letter of
of Credit credit or the Philippine
equivalent of such
value, if expressed in
foreign currency
183 Life Insurance If the amount exempt Amount of Insurance
Policies of insurance
does not
exceed
P100,000.00 Amount of Insurance
10.00
If the amount
of insurance
exceeds
P100,000.00 Amount of Insurance
but does not
exceed 25.00
P300,000.00
If the amount Amount of Insurance

of insurance
exceeds
P300,000.00 50.00
but does not
exceed Amount of Insurance
P500,000.00
If the amount
of insurance 75.00
exceeds Amount of Insurance
P500,000.00
but does not
exceed
P750,000.00
100.00
If the amount
of insurance
exceeds
P750,000.00
but does not
exceed
P1,000,000.00
If the amount
of insurance
exceeds
P1,000,000.00
184 Policies Of Insurance P4.00 premium .50 12.5% Premium charged
upon Property or fraction
thereof
185 Fidelity Bonds and P4.00 premium .50 12.5% Premium charged
other Insurance or fraction
Policies thereof
186 Policies of P200.00 or .50 .25% Premium or installment
Annuities or other fraction thereof payment or contract
instruments price collected
Premium or
contribution collected
P200.00 or .20 .10%
fraction thereof
Pre-Need Plans
187 Indemnity Bonds P4.00 or .30 7.5% Premium charged
fraction thereof
188 Certificates of Each 15.00
Damage or otherwise Certificate
and Certificate or
document issued by
any customs officers,
marine surveyor,
notary public
and certificate
required by law or by
rules and regulations
of a public office
189 Warehouse Receipts Each Receipt 15.00
(except if value does
not exceed P200.00)
190 Jai-alai, Horse Race P1.00 cost of .10 10% Cost of the ticket
Tickets, lotto or Other ticket
Authorized Cost of the ticket
Number Games
Additional
P0.10 on every
P1.00 or
fraction thereof
if cost
of ticket
exceeds P1.00
191 Bills of Lading or If the value of 1.00 Value of such goods
Receipts(except such goods
charter party) exceeds
P100.00 and
does not
exceed Value of such
P1,000.00 10.00 goods
If the value
exceeds
P1,000.00 Exempt
Freight tickets
covering
goods,
merchandise or
effects carried
as
accompanied
baggage of
passengers on
land and water
carriers
primarily
engaged in the
transportation
of passengers
192 Proxies(except Each proxy 15.00
proxies issued
affecting the affairs of
associations
or corporations,
organized for
religious, charitable
or literary purposes)
193 Powers of Each 5.00
Attorney(except acts Document
connected with the
collection of claims
due from or accruing
to the Government of
the Republic of the
Philippines, or the
government of any
province, city or
Municipality)
194 Lease and other First 2,000 or 3.00 .15%
Hiring agreements or fractional part
memorandum or thereof
contract for hire, use
or rent of any land or For every 1.00 .1%
tenements or portions P1,000 or
thereof fractional part
thereof in
excess of
the first
P2,000 for each
year of the
term of the said
contract
or agreement
195 Mortgages Pledges of First 5,000 20.00 .4% Amount Secured
lands, estate, or
property and Deeds Amount Secured
of Trust On each 10.00 .2%
P5,000 or
fractional part
thereof in
excess of 5,000
196 Deed of Sale, First 1,000 15.00 1.5% Consideration or Fair
instrument or writing Market Value,
and Conveyances of whichever is higher
Real Property (if government is a
(except grants, patents party, basis shall be the
or original certificate consideration)
of the government)
Consideration or Fair
Market Value,
whichever is higher
For each 15.00 1.5% (if government is a
additional party, basis shall be the
P1,000 or consideration)
fractional part
thereof in
excess of
P1,000
197 Charter parties and 1,000 tons and P500.00 for Registered gross
Similar Instruments below the first 6 tonnage
months Plus
P50 each
month or
fraction
thereof in
excess of 6
months
1,001 to 10,000 P1,000 for Registered gross

tons the first 6 tonnage
months Plus
P100 each
month or
fraction
thereof in
excess of 6
months
Over 10,000 P1,500 for Registered gross

tons the first 6 tonnage
months Plus
P150 each
month or
fraction
thereof in
excess of 6
months
198 Stamp Tax on At the same
Assignments and rate as that
Renewals or imposed on
Continuance of the original
Certain Instruments instrument.
Procedures
File BIR Form No. 2000 or BIR Form No. 2000-OT in triplicate (two copies for the BIR and one copy for the taxpayer)
with the Authorized Agent Bank (AAB) in the Revenue District where the seller or transferor is registered, for shares of
stocks or where the property is located, for real property. In places where there are no AAB, the return will be filed
directly with the Revenue Collection Officer or Authorized City or Municipal Treasurer.
Submit all documentary requirements and proof of payment to the Revenue District Office having jurisdiction over the
place of residence of the seller.
Deadlines
The Documentary Stamp Tax return (BIR Form 2000) shall be filed in triplicate (two copies for the BIR and one copy for
the taxpayer) within five (5) days after the close of the month when the taxable document was made signed, issued,
accepted or transferred; upon remittance by Collection Agents of collection from sale of loose stamps. The Documentary
Stamp Tax shall be paid upon filing of the return.
1) Who are required to file Documentary Stamp Tax Declaration Return?
a) In case of constructive affixture of documentary stamps, by the persons making, signing, issuing, accepting or
transferring documents, instruments, loan agreements and papers, acceptances, assignments, sales and conveyances of the
obligation, right or property incident thereto wherever the document is made, signed, issued, accepted or transferred when
the obligation or right arises from Philippine sources or the property is situated in the Philippines at the same time such act
is done or transaction had;
b) By using the web-based Electronic Documentary Stamp Tax (eDST) System in the payment/remittance of its/his/her
DST liabilities and the affixture of the prescribed documentary stamp on taxable documents; and
c) By Revenue Collection Agent, for remittance of sold loose documentary stamps.
Note: Wherever one party to the taxable document enjoys exemption from the tax imposed, the other party who is not
exempt will be the one directly liable to file Documentary Stamp Tax Declaration and pay the applicable stamp tax.
2) Where is the Documentary Stamp Tax Declaration Return filed?
In the Authorized Agent Bank (AAB) within the territorial jurisdiction of the RDO which has jurisdiction over the
residence or principal place of business of the taxpayer or where the property is located in case of sale of real property or
where the Collection Agent is assigned. In places where there is no Authorized Agent Bank, the return will be filed with
the Revenue Collection Officer or duly authorized City or Municipal Treasurer where the taxpayer's residence or principal
place of business is located or where the property is located in case of sale of real property or where the Collection Agent
is assigned.
3) What are the documents/papers not subject to Documentary Stamp Tax? (sec. 9, RR No. 13-2004)
 Policies of insurance or annuities made or granted by a fraternal or beneficiary society, order, association or
cooperative company, operated on the lodge system or local cooperation plan and organized and conducted solely
by the members thereof for the exclusive benefit of each member and not for profit
 Certificates of oaths administered by any government official in his official capacity or acknowledgement by any
government official in performance of his official duty
 Written appearance in any court by any government official in his official capacity
 Certificates of the administration of oaths to any person as to the authenticity of any paper required to be filed in
court by any person or party thereto, whether the proceedings be civil or criminal
 Papers and documents filed in court by or for the national, provincial, city or municipal governments
 Affidavits of poor persons for the purpose of proving poverty
 Statements and other compulsory information required of persons or corporations by the rules and regulations of
the national, provincial, city or municipal government exclusively for statistical purposes and which are wholly
for the use of the Bureau or office in which they are filed, and not at the instance or for the use or benefit of the
person filing them
 Certified copies and other certificates placed upon documents, instruments and papers for the national, provincial,
city or municipal governments made at the instance and for the sole use of some other branch of the national,
provincial, city or municipal governments
 Certificates of the assessed value of lands, not exceeding P200 in value assessed, furnished by the provincial, city
or municipal Treasurer to applicants for registration of title to land
 Borrowing and lending of securities executed under the Securities Borrowing and Lending Program of a
registered exchange, or in accordance with regulations prescribed by the appropriate regulatory authority:
Provided, however, That any borrowing or lending of securities agreement as contemplated hereof shall be duly
covered by a master securities borrowing and lending agreement acceptable to the appropriate regulatory
authority, and which agreement is duly registered and approved by the Bureau of Internal Revenue (BIR)
 Loan agreements or promissory notes, the aggregate of which does not exceed Two hundred fifty thousand pesos
(P250,000), or any such amount as may be determined by the Secretary of Finance, executed by an individual for
his purchase on installment for his personal use or that of his family and not for business or resale, barter or hire
of a house, lot, motor vehicle, appliance or furniture: Provided, however, That the amount to be set by the
Secretary of Finance shall be in accordance with a relevant price index but not to exceed ten percent (10%) of the
current amount and shall remain in force at least for three (3) years
 Sale, barter or exchange of shares of stock listed and traded through the local stock exchange (R.A 9648)
 Assignment or transfer of any mortgage, lease or policy of insurance, or the renewal or continuance of any
agreement, contract, charter, or any evidence of obligation or indebtedness, if there is no change in the maturity
date or remaining period of coverage from that of the original instrument.
 Fixed income and other securities traded in the secondary market or through an exchange.
 Derivatives: Provided, That for purposes of this exemption, repurchase agreements and reverse repurchase
agreements shall be treated similarly as derivatives
 Interbranch or interdepartmental advances within the same legal entity
 All forebearances arising from sales or service contracts including credit card and trade receivables: Provided,
That the exemption be limited to those executed by the seller or service provider itself.
 Bank deposit accounts without a fixed term or maturity
 All contracts, deeds, documents and transactions related to the conduct of business of the Bangko Sentral ng
Pilipinas
 Transfer of property pursuant to Section 40(C)(2) of the National Internal Revenue Code of 1997, as amended
 Interbank call loans with maturity of not more than seven (7) days to cover deficiency in reserves against deposit
liabilities, including those between or among banks and quasi-banks
4) What are the implications of failure to stamp taxable documents?
 The untaxed document will not be recorded, nor will it or any copy thereof or any record of transfer of the same
be admitted or used in evidence in court until the requisite stamp or stamps have been affixed thereto and
cancelled
 No notary public or other officer authorized to administer oaths will add his jurat or acknowledgment to any
document subject to Documentary Stamp Tax unless the proper documentary stamps are affixed thereto and
cancelled.
5) What is Electronic Documentary Stamp Tax (eDST) System? (sec. 5 (1), RR No. 7-2009)
The eDST is a web-based application created for taxpayers and the BIR that is capable of affixing a secured documentary
stamp on the taxable documents as defined under the appropriate provisions under Title VII of the National Internal
Revenue Code of 1997, as amended, thru the use of a computer unit, any laser printer with at least 1200 dpi resolution,
and Internet Explorer 7.0 It is also capable of providing a 3-layer watermark on stamps for added security.
6) Is DST Law applicable on Electronic Documents? (sec. 10, RR No. 13-2004)
The DST rates as imposed under the Code, as amended by R.A. 9243 shall be applicable on all documents not otherwise
expressly exempted by the said law, notwithstanding the fact that they are in electronic form. As provided for by R.A.
8792, otherwise known as the Electronic Commerce Act, electronic documents are the functional equivalent of a written
document under existing laws, and the issuance thereof is therefore tantamount to the issuance of a written document, and
therefore subject to DST.
7) What are the inclusions of a debt instrument? (sec. 5, RR No. 13-2004)
“Debt Instrument” shall mean instruments representing borrowing and lending transaction including but not limited to:

 debentures,
 certificates of indebtedness,
 due bills,
 bonds,
 loan agreements, including those signed abroad wherein the object of the contract is located or used in
the Philippines,
 instruments and securities issued by the government or any of its instrumentalities,
 deposit substitute debt instruments,
 certificates or other evidences of deposits that are drawing instrument significantly higher than the regular
savings deposit taking into consideration the size of the deposit and the risks involved,
 certificates or other evidences of deposits that are drawing interest and having a specific maturity date,
 promissory notes, whether negotiable or non-negotiable, except bank notes issued for circulation.
8) Is any document, transaction or arrangement entered into under Financial Lease subject to Documentary Stamp Tax?
(RMC No. 46-2014)
Financial lease is akin to a debt rather than a lease. A nature of an obligation than a lease of personal property. The mere
act of extending credit is already a means of facilitating an obligation or advancing in behalf of the lessee certain property
in lieu of cash in exchange for a definitive amortization to be paid to the lessor with profit margin included. Section 179 of
the NIRC, as amended, covers all debt instruments. Therefore, being a nature of an obligation, any document, transaction
or arrangement entered into under financial lease is subject to DST under such Section of the NIRC, as amended.

Taxation Notes

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Taxation Notes

Uploaded by

Copyright:

Available Formats

INCOME TAXATION

Amount of Net Taxable Income Rate

Tax Rate Taxable Base

B. For Non-Resident Aliens Engaged in Trade or Business

C) For Non-Resident Aliens Not Engaged in Trade or Business

E) General Professional Partnerships

General Professional Partnerships 0%

1) a. In General – on net taxable income 30%

G) Resident Foreign Corporation

1) a. In General – on net taxable income 30%

2) What is Taxable Income?

3) What is Gross Income?

Gross income means all income derived from whatever source.

4) What comprises gross income?

Gross income includes, but is not limited to the following:

5) What are some of the exclusions from gross income?

6) What are the allowable deductions from gross income?

b) Itemized Deductions which include the following:

For head of family……………………………P 50,000.00

For each married individual *…………P 50,000.00

The additional exemption can be claimed by the following:

7) Who are required to file the Income Tax returns?

8) Who are not required to file Income Tax returns?

a. An individual who is a minimum wage earner

9) Who are exempt from Income Tax?

 Non-resident citizen who is:

 Overseas Filipino Worker, including overseas seaman

NOTE: A Filipino employed as Philippine Embassy/Consulate service personnel of the Philippine

Gross Income P ___________

12) How is Income Tax paid?

Income Tax Due P ___________

15) When does a corporation start to be covered by the MCIT?

16) When is the MCIT reported and paid? Is it quarterly?

17) How is MCIT computed?

18) What is the carry forward provision under the MCIT?

19) How would the MCIT be recorded for accounting purposes?

20) How long can we amend our income tax return?

22) What is a tax treaty?

23) What are the effective Philippine tax treaties?

Effective Philippine Tax Treaties (as of June 2010)

Country Date of Effectivity Date and Venue of Signature

The International Tax Affairs Division (ITAD).

25) What taxes are covered by Philippine tax treaties?

26) How is business income treated under our tax treaties?

28) What is the Most-Favored-Nation clause (MFN)?

29) What is the tax treatment on immovable property?

Effective January 1, 1998 up to Present

If the Net Estate is

If the Net Estate is

If the Net Estate is

Estate and Inheritance Tax

If the Net Estate is

Over But not Over ESTATE INHERITANCE

Estate and Inheritance Tax

If the Net Estate is

Over But not Over ESTATE INHERITANCE

Extension of Time of Filing:

Frequently Asked Questions

1. Who are required to file the Estate Tax return?

- In all cases of transfer subject to Estate Tax;

2. What are included in gross estate?

 For resident alien decedents/citizens:

a) Real or immovable property, wherever located

b) Tangible personal property, wherever located