Understanding Business Taxes in the Philippines: A Comprehensive Guide

📚Business taxes are different from income taxes, with the former being levied on business activities and the latter on income generated.

💼For small businesses with gross sales below 3 million, the percentage tax rate is reduced from 3% to 1% based on gross sales or receipts.

💰Businesses with gross sales exceeding 3 million are required to update their registration and pay the value-added tax (VAT) instead of the percentage tax.

💼Percentage taxpayers have the option to update their registration and become VAT-registered.

📅The VAT rate is 12% and is levied on the sale, barter, exchange, or lease of goods or services, as well as on importation of goods into the Philippines.

What is the difference between income taxes and business taxes?

—Income taxes are levied on income generated by businesses and individuals, while business taxes are levied on specified profit-making costs and business activities.

What is the percentage tax?

—The percentage tax is a tax levied on businesses with gross sales or receipts below 3 million. The tax rate is reduced from 3% to 1% based on gross sales or receipts.

What is the value-added tax (VAT)?

—The value-added tax is a form of sales tax levied on the sale, barter, exchange, or lease of goods or services, as well as on importation of goods into the Philippines. The VAT rate is 12%.

Can percentage taxpayers choose to become VAT-registered?

—Yes, percentage taxpayers have the option to update their registration and become VAT-registered.

What is the VAT rate?

—The VAT rate is 12% and is levied on the sale, barter, exchange, or lease of goods or services, as well as on importation of goods into the Philippines.

00:23Business tax is a tax levied on taxpayers engaged in business, while income tax is levied on income generated by businesses and individuals.

01:23The percentage tax is a common business tax for small businesses with gross sales or receipts below 3 million. The tax rate has been reduced from 3% to 1% based on gross sales or receipts.

02:36For businesses with gross sales exceeding 3 million, they are required to update their registration and pay the value-added tax (VAT) instead of the percentage tax.

03:59Percentage taxpayers have the option to update their registration and become VAT-registered.

05:22The value-added tax (VAT) is a form of sales tax levied on the sale, barter, exchange, or lease of goods or services, as well as on importation of goods into the Philippines. The VAT rate is 12%.