National Taxes in the Philippines

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. Examples
of documentary stamp tax are those that are
charged on bank promissory notes, deed of
sale, and deed of assignment on transfer of
shares of corporate stock ownership.
Donors 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. Donors
tax is based on a graduated schedule of tax
rate.
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. Estate tax is also based on a
graduated schedule of tax rate.
Income Tax is a tax on all yearly profits
arising from property, profession, trades or
offices or as a tax on a persons income,
emoluments, profits and the like. Selfemployed individuals and corporate taxpayers
pay quarterly income taxes from 1st quarter to
3rd quarter. And instead of filing quarterly
income tax on the fourth quarter, they file and
pay their annual income tax return for the
taxable year. Individual income tax is based on
graduated schedule of tax rate, while
corporate income tax in based on a fixed rate
prescribe by the tax law or special law.
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 the amount required to register
as VAT-registered taxpayers. Percentage
taxes are usually based on a fixed rate. They

are usually paid monthly by businesses or

professionals. However, some special
industries and transactions pay percentage tax
on a quarterly basis.
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, causing this to increase the prices of
most goods and services bought and paid by
consumers. VAT returns are usually filed and
paid monthly and quarterly.
Excise Tax is a tax imposed on goods
manufactured or produced in the Philippines
for domestic sale or consumption or any other
disposition. It is also imposed on things that
are imported.
Withholding Tax on Compensation is the
tax withheld from individuals receiving purely
compensation income. This tax is what
employers withheld in their employees
compensation income and remit to the
government through the BIR or authorized
accrediting agent.
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. Examples of the expanded
withholding taxes are those that are withheld
on rental income and professional income.
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. An example of
final withholding tax is the tax withheld by
banks on the interest income earned on bank
deposits.
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.

Local Taxes in the Philippines

Tax on Transfer of Real Property
Ownership tax imposed on the sale,
donation, barter, or on any other mode of
transferring ownership or title of real property.
Tax on Business of Printing and
Publication tax on the business of persons
engaged in the printing and/or publication of
books, cards, posters, leaflets, handbills,
certificates, receipts, pamphlets, and others of
similar nature.
Franchise Tax tax on businesses enjoying a
franchise, at the rate not exceeding fifty
percent (50%) of one percent (1%) of the
gross annual receipts for the preceding
calendar year based on the incoming receipt,
or realized, within its territorial jurisdiction.
Tax on Sand, Gravel and Other Quarry
Resources tax imposed on ordinary stones,
sand, gravel, earth, and other quarry
resources, as defined under the National
Internal Revenue Code, as amended,
extracted from public lands or from the beds of
seas, lakes, rivers, streams, creeks, and other
public waters within its territorial jurisdiction.
Professional Tax an annual professional tax
on each person engaged in the exercise or
practice of his profession requiring
government examination.
Amusement Tax tax collected from the
proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing
stadia, and other places of amusement.
Annual Fixed Tax For Every Delivery Truck
or Van of Manufacturers or Producers,
Wholesalers of, Dealers, or Retailers in,
Certain Products an annual fixed tax for
every truck, van or any vehicle used by
manufacturers, producers, wholesalers,
dealers or retailers in the delivery or
distribution of distilled spirits, fermented
liquors, soft drinks, cigars and cigarettes, and
other products as may be determined by the
sangguniang panlalawigan, to sales outlets, or

consumers, whether directly or indirectly,

within the province.
Tax on Business taxes imposed by cities,
municipalities on businesses before they will
be issued a business license or permit to start
operations based on the schedule of rates
prescribed by the local government code, as
amended. Take note that the rates may vary
among cities and municipalities. This is usually
what businesses pay to get their Business
Mayors Permit.
Fees for Sealing and Licensing of Weights
and Measures fees for the sealing and
licensing of weights and measures at such
reasonable rates as shall be prescribed by the
sangguniang bayan of the municipality or city.
Fishery Rentals, Fees and Charges
rentals, fees or charges imposed by the
municipality/city to grantees of fishery
privileges in the municipal/city waters, e.g.,
fishery privileges to erect fish corrals, oysters,
mussels or other aquatic beds or bangus fry
areas and others as mentioned in the local
government code, as amended.
Community Tax tax levied by cities or
municipalities to every inhabitant of the
Philippines eighteen (18) years of age or over
who has been regularly employed on a wage
or salary basis for at least thirty (30)
consecutive working days during any calendar
year, or who is engaged in business or
occupation, or who owns real property with an
aggregate assessed value of One thousand
pesos (P1,000.00) or more, or who is required
by law to file an income tax return. Community
tax is also imposed on every corporation no
matter how created or organized, whether
domestic or resident foreign, engaged in or
doing business in the Philippines.
Taxes that may be levied by the barangays
on stores or retailers with fixed business
establishments with gross sales of receipts of
the preceding calendar year of Fifty thousand
pesos (P50,000.00) or less, in the case of
cities and Thirty thousand pesos (P30,000.00)
or less, in the case of municipalities, at a rate
not exceeding one percent (1%) on such gross
sales or receipts.
Service Fees or Charges fees or charges
that may be collected by the barangays for

services rendered in connection with the

regulations or the use of barangay-owned
properties or service facilities, such as palay,
copra, or tobacco dryers.
Barangay Clearance a reasonable fee
collected by barangays upon issuance of
barangay clearance a document required for

many government transactions, such as when

applying for business permit with the city or
municipality.