When we talk about taxes in the Philippines, most people immediately think of income tax or VAT. But did you know there are other percentage taxes that apply to specific transactions or businesses? These taxes often fly under the radar, yet they can have a significant impact on your financial and business activities.
In this guide, we’ll explore some of the lesser-known percentage taxes, such as stock transaction tax, amusement tax, and more, so you can stay informed and compliant.
What Are Percentage Taxes?
Percentage taxes are taxes imposed on the gross receipts or sales of certain types of businesses or transactions, calculated as a percentage of the transaction amount. They are generally applicable to entities not VAT-registered or to specific industries and activities.
1. Stock Transaction Tax (STT)
The Stock Transaction Tax is levied on the sale, barter, exchange, or other disposition of shares of stock listed and traded through the Philippine Stock Exchange (PSE).
Tax rate: 0.6% of the gross selling price
Paid by the seller of the shares
Collected and remitted by the stockbroker or selling agent
Why it matters: If you’re investing or trading stocks, this tax affects your overall transaction costs.
2. Amusement Tax
This tax applies to businesses engaged in providing amusement, recreation, or entertainment services, including cinemas, theaters, concert halls, sports arenas, amusement parks, and gaming establishments.
Tax rate: Varies by local government units (LGUs), typically ranging from 5% to 10% of gross receipts
Collected by the LGUs, not the national government
Why it matters: If you run or attend events or entertainment venues, this tax helps fund local services but may increase ticket prices.
3. Other Percentage Taxes on Businesses
Besides the above, other businesses may be subject to percentage taxes, such as:
Franchise Tax on certain utilities (electricity, water)
Percentage Tax on Service Providers not VAT-registered (e.g., small restaurants, repair shops)
Percentage Tax on Banks and Non-Bank Financial Institutions
The tax rates vary depending on the industry and amount of gross sales or receipts.
How to Know If You’re Subject to These Taxes
Check your business registration and tax classification: VAT-registered businesses are generally exempt from percentage taxes but must pay VAT instead.
Review the nature of your transactions: Stock sales, entertainment services, or small-scale sales might trigger specific percentage taxes.
Consult with a tax professional or the BIR to confirm applicable taxes.
Filing and Payment
Percentage taxes are usually filed and paid monthly using BIR Form 2551Q (Quarterly Percentage Tax Return) or BIR Form 2551M (Monthly Percentage Tax Return) for some taxpayers.
Failure to file or pay on time can result in penalties such as surcharges, interest, and compromise penalties.
Final Thoughts
While often overlooked, these lesser-known percentage taxes are important parts of the Philippine tax system. Being aware of them can help you avoid surprises and ensure your business or personal transactions stay compliant.
If you’re involved in stock trading, entertainment services, or small-scale business activities, make sure to factor these taxes into your plans.
Need help identifying which percentage taxes apply to your business or calculating your tax dues? I can help you create a personalized checklist or guide—just ask!
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