Philippines services
Other Percentage Taxes (OPT) are business taxes imposed on certain persons or entities not subject to VAT, or engaged in industries specifically covered by the National Internal Revenue Code (NIRC).
OPT is computed based on gross quarterly sales or receipts and applies to:
OPT is not a substitute for income tax — it is a separate business tax. It applies in addition to income tax obligations.
| ITEM | Summary |
|---|---|
| What OPT is | Business tax for non-VAT taxpayers & specific industries |
| Governing law | NIRC Title V, Sections 116–127 |
| Standard Sec. 116 rate | 3% of gross quarterly receipts |
| Filing form | BIR Form 2551Q |
| Filing frequency | Quarterly |
| Deadline | 25th day after quarter close - (applicable to eFPS and eBIRForms filers; manual filers should verify applicable deadline with their RDO) |
| Applies to | Non-VAT businesses & special categories |
Individuals engaged in business and not VAT-registered, whose annual gross sales or receipts do not exceed the VAT threshold of ₱3,000,000, are generally subject to Section 116 percentage tax unless exempt.
This includes:
Corporations, partnerships, and other entities that are not VAT-registered or are subject to specific OPT provisions must also file percentage tax returns.
Examples include:
Check annual gross receipts:
Check business classification:
Check exemptions:
If you are a professional or self-employed individual: check whether you have opted for the 8% flat income tax rate under TRAIN. If you have, you are not subject to OPT.
OPT is not a single tax. It includes multiple
categories depending on the nature of business.
It is currently computed at 3% of gross quarterly sales or receipts and is the most common form of Other Percentage Tax for small non-VAT businesses and individuals.
Other percentage taxes apply regardless of VAT status and are industry specific unless the taxpayer is specifically exempt under law.
| Coverage | Taxable Base | Tax Rate |
|---|---|---|
| Domestic carriers and keepers of garages | Gross receipts | 3% |
| International air/shipping carriers doing business in the Philippines | Gross receipts on transport of cargo from the Philippines to a foreign country | 3% |
| Franchise grantees: Gas and water utilities Radio and television broadcasting companies whose annual gross receipts of the preceding year do not exceed Php10,000,000 and did not opt to register as VAT taxpayer | Gross receipts Gross receipts | 2% 3% |
| Overseas dispatch, message or conversation originating from the Philippines | Amount paid for the service | 10% |
| Banks and non-bank financial intermediaries performing quasi-banking functions | Interest, commissions and discounts from lending activities as well as income from financial leasing, on the basis of remaining maturities of instruments from which receipts are derived: • If maturity period is five years or less • If maturity period is more than five years Dividends and equity shares and net income of subsidiaries Royalties, rentals of property, real or personal, profits from exchange and all other items treated as gross income under Sec. 32 of the Tax Code, as amended Net trading gains within the taxable year of foreign currency, debt securities, derivatives and other similar financial instruments | 5% 1% 0% 7% 7% |
| Other non-bank financial intermediaries | Interest, commissions, discounts and all other items treated as gross income under the Tax Code, as amended Interest, commissions, discounts from lending activities, as well as income from financial leasing on the basis of remaining maturities of instruments from which such receipts are derived: • If maturity period is five years or less • If maturity period is more than five years | 5% 5% 1% |
| Life Insurance Company/Agent/Corporation (except purely cooperative companies or associations) | Total premiums collected | 2% |
| Agents of foreign insurance companies (except reinsurance premium): Insurance agents authorized under the Insurance Code to procure policies of insurance for companies not authorized to transact business in the Philippines Owners of property obtaining insurance directly with foreign insurance companies | Total premiums collected Total premiums paid | 4% 5% |
| Proprietor, lessee or operator of the following: Cockpits Cabarets, Night or Day Clubs, videoke bars, karaoke bars, karaoke televisions, karaoke boxes and music lounges Boxing exhibitions (except when the World or Oriental Championship is at stake in any division, provided further that at least one of the contenders for World Championship is a citizen of the Philippines and said exhibitions are promoted by a citizen/s of the Philippines or by a corporation/ association at least 60% of the capital of which is owned by said citizen/s) Professional basketball games (in lieu of all other percentage taxes of whatever nature and description) Jai-alai and race track | Gross receipts Gross receipts Gross receipts Gross receipts Gross receipts | 18% 18% 10% 15% 30% |
| Winnings on horse races | Winnings or 'dividends' · Winnings from double forecast/quinella and trifecta bets · Prizes of owners of winning race horses | 10% 4% 10% |
These taxes apply only to transactions executed through regulated exchanges and brokers under NIRC provisions.
| Coverage | Basis | Tax Rate |
|---|---|---|
| Sale, barter, exchange or other disposition of shares of stock listed and traded through the Local Stock Exchange other than the sale by a dealer of securities | Gross selling price or gross value in money Note: Rate is as stated in the NIRC. Verify against the latest BIR issuance to confirm no amendment has been enacted prior to publication. | 6/10 of 1% |
| Sale, barter or exchange or other disposition through: • Initial Public Offering (IPO) the issuing corporation shall pay the imposed tax • Secondary Public Offering the seller shall pay the imposed tax | Gross selling price or gross value in money Proportion of disposed shares to total outstanding shares after the listing in the local stock exchange: • Up to 25% • Over 25% but not over 33 1/3% • Over 33 1/3% | 4% 2% 1% |
In general, percentage tax is computed as follows:
Percentage Tax = Rate × Gross Quarterly Sales/Receipts
Percentage tax is computed before any income tax. Expenses do not reduce percentage tax.
Example
Gross receipts = ₱500,000 Rate = 3%
Tax due = ₱15,000
Form: BIR Form 2551Q — Quarterly Percentage Tax Return
When: Quarterly – On or before the 25th day following the close of each quarter. Note that this deadline applies to eFPS and eBIRForms filers. Manual filers should confirm the applicable deadline with their Revenue District Office (RDO).
How: Taxpayers may file via:
VAT applies to businesses exceeding ₱3,000,000 annual sales.
Percentage tax applies to smaller non-VAT businesses or special industries.
If below the threshold, you may voluntarily register for VAT.
Once VAT-registered, you cannot revert easily.
Percentage tax is not creditable against income tax — meaning you cannot use it to directly reduce your income tax liability peso-for-peso. However, percentage tax paid in connection with your trade or business is deductible as an ordinary business expense under Section 34(C) of the NIRC when computing your taxable net income. This distinction matters: it reduces your taxable income, not your tax due directly.
Yes. Zero returns must still be filed.
It depends on how you are registered. If you are a non-VAT registered professional with gross receipts below ₱3,000,000, you are generally subject to 3% OPT under Section 116. However, if you have opted for the 8% flat income tax rate under the TRAIN Law, you are exempt from percentage tax — the 8% rate replaces both the graduated income tax and OPT for qualifying self-employed individuals and professionals.
Republic Acts
Revenue Regulations (RR)
Revenue Memorandum Circulars (RMC)
Revenue Memorandum Orders (RMO)
