Business Taxes on Types of Business

 Business Taxes:

*         Taxes imposed upon onerous transfers such as sale, barter, exchange or importation.

*         Business taxes are in addition to income and other taxes paid unless specifically exempted.  

*  If the Transaction is subject to vat, then it is exempt from percentage tax and vice-versa.  However, it may still be subject to excise tax.

1.    Value-added taxes. 

VAT is a tax on the value added by every seller to the purchase price or cost in the sale or lease of goods, property or services in the ordinary course of trade or business as well as on importation of goods into the Philippines, whether for personal or business use.  It is a business tax.  Without a business pursued in the Philippines (except importation) by the taxpayer, the tax cannot be applied.  “In the course of trade or business” means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a non-stock, non-profit private organization or government entity.  Generally, services rendered in the Philippines by a non-resident foreign person shall be considered as being rendered in the course of trade or business even if the performance is not regular.

2.    Percentage taxes

*  It is a tax imposed on sale, barter, exchange or importation of goods, or sale of services based upon gross sales, value in money of receipts derived by the manufacturer, producer, importer or seller measured by certain percentage of the gross selling price or receipts.

3.    Excise taxes

 * It is a tax imposed on goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition, and goods imported.  Specifically, excise taxes are imposed on:

Manufacturers and Importers, of any of the following categories of goods or article:

a.     Distilled spirits such as liquors

b.     Wines

c.     Fermented liquors (i.e., beer)

d.     Cigars

e.     Cigarettes

f.      Automobiles

g.     Manufactured fuel oil (i.e., gasoline bunker fuel oil)

h.     Mineral products (i.e., gold, silver); and

i.      Non-essential goods (i.e., jewelry, perfumes)

*  Classifications:

a. Specific Excise Tax -  Based on weight or volume capacity or any other      physical unit of measurement.

b. Ad-Valorem Excise Tax – Based on selling price or other specified value of    the goods.  

*  Purposes of Imposing Excise Tax

a.     To curtail consumption of certain commodities which are considered as         harmful to the individual or to the community.

b.     To protect domestic industries from competition posed by similar imported    products.

c.     To distribute the tax burden in proportion to benefit derived from a               particular government service.