Percentage Tax Beyond 3%: Common Carriers, Banks, Insurance, and Stock Transactions Under BIR Rules
The 3% general percentage tax reported on BIR Form 2551Q is only one of several percentage taxes under Title V of the National Internal Revenue Code (NIRC) — separate rates apply to common carriers, international carriers, certain franchise grantees, overseas communications, banks and financial intermediaries, life insurance premiums, and stock transactions. Each has its own section, rate, and tax base, and applies to specific businesses regardless of whether they also fall under the general VAT/percentage tax framework most small businesses use.
This guide summarizes the other percentage taxes most likely to come up outside the general 3%/VAT choice. For that general choice, see VAT vs. Percentage Tax and How to File BIR Form 2551Q.
Keep Your BIR Compliance Organized FREE →What other percentage taxes exist under Title V? #
Title V of the NIRC (Sections 116 to 127) covers percentage taxes as a category, and each section after the general 3% rule targets a specific industry with its own rate and base.
| NIRC Section | Applies to | Rate | Base |
|---|---|---|---|
| 116 | General percentage tax (non-VAT businesses below the VAT threshold) | 3% | Quarterly gross sales/receipts |
| 117 | Domestic common carriers by land (passengers), keepers of garages | 3% | Quarterly gross receipts |
| 118 | International air/shipping carriers doing business in the Philippines | 3% | Gross receipts from outbound cargo transport |
| 119 | Radio/TV franchise grantees (gross receipts ≤ ₱10,000,000/year); electric, gas, water utility franchise grantees | 3% (broadcasting) / 2% (utilities) | Gross receipts under the franchise |
| 120 | Overseas dispatch, message, or conversation transmitted by telephone, telegraph, or similar service | 10% | Amount paid for the service |
| 121 | Banks and non-bank financial intermediaries performing quasi-banking functions | Per a schedule based on the remaining maturity of the underlying instrument | Gross receipts from interest, commissions, discounts, and similar income |
| 123 | Life insurance premiums (except purely cooperative companies) | 2% | Total premiums collected |
| 127 | Sale of shares of stock listed and traded through the local stock exchange | 0.1% (as of July 1, 2025) | Gross selling price |
What changed recently — the stock transaction tax cut #
The percentage tax on selling publicly listed shares through the local stock exchange dropped from 0.6% to 0.1% of the gross selling price, effective July 1, 2025. This came from the Capital Markets Efficiency Promotion Act (CMEPA), Republic Act No. 12214, implemented by Revenue Regulations No. 20-2025 (issued August 5, 2025). The seller or transferor remits this stock transaction tax (STT) — it is collected at source by the broker executing the sale, separate from any income tax on the gain itself, since STT is a percentage tax on the transaction, not an income tax on the profit.
| Before July 1, 2025 | From July 1, 2025 | |
|---|---|---|
| Stock transaction tax rate | 0.6% (6/10 of 1%) | 0.1% (1/10 of 1%) |
| Legal basis | NIRC Section 127, as previously set | CMEPA (RA 12214) / RR No. 20-2025 |
Why does industry classification matter here? #
These Title V taxes generally apply in place of VAT for the specific covered activity, much like the general 3% rate applies only below the VAT threshold — so a business needs to confirm which regime covers its specific transaction rather than assuming the general 3%/VAT choice is the only option. A bus company, for example, doesn’t choose between VAT and the general 3% rate the way a retail store does — Section 117’s 3% common carrier’s tax applies to its passenger transport revenue specifically, under its own rule, separate from whatever else the company might sell. Misclassifying a specialized activity under the general percentage tax rule (or vice versa) produces the wrong tax base and rate on BIR Form 2551Q or the relevant specialized return.
Frequently asked questions #
Is the 3% rate on BIR Form 2551Q the only percentage tax under Philippine law? #
No. The 3% general percentage tax on BIR Form 2551Q, under NIRC Section 116, is the most commonly encountered percentage tax, but Title V of the NIRC (Sections 117 to 127) imposes several other percentage taxes on specific industries — common carriers, international carriers, franchise grantees, overseas communications, banks and financial intermediaries, life insurance, and stock transactions — each with its own rate and tax base.
What percentage tax rate applies to domestic common carriers? #
Under NIRC Section 117, domestic common carriers by land transporting passengers, and keepers of garages, pay a percentage tax of 3% of quarterly gross receipts.
What is the current stock transaction tax rate? #
The stock transaction tax on the sale of shares listed and traded through the local stock exchange is 0.1% (one-tenth of one percent) of the gross selling price, reduced from the previous 0.6% rate effective July 1, 2025, under Revenue Regulations No. 20-2025 implementing the Capital Markets Efficiency Promotion Act (Republic Act No. 12214).
Do VAT-registered common carriers still pay this percentage tax? #
Generally no for the specific transport activity — these other percentage taxes under Title V generally apply as an alternative to VAT for the specific covered activity, similar in structure to how the general 3% percentage tax under Section 116 applies only to non-VAT-registered taxpayers below the VAT threshold.
What percentage tax applies to life insurance premiums? #
Under NIRC Section 123, every person, company, or corporation doing life insurance business in the Philippines (except purely cooperative companies) pays a percentage tax of 2% on total premiums collected.
Summary #
Outside the familiar 3% general percentage tax on BIR Form 2551Q, Title V of the NIRC taxes common carriers, international carriers, certain franchise holders, overseas communications, banks, life insurance, and stock transactions each at their own rate — most notably the stock transaction tax, cut from 0.6% to 0.1% by CMEPA and RR No. 20-2025 effective July 1, 2025. Confirm which specific Title V section governs a specialized transaction before defaulting to the general 3% rule. See VAT vs. Percentage Tax for the general framework these specialized rules sit alongside.