Compute the 3% percentage tax on your quarterly gross sales/receipts under Section 116 — the business tax for non-VAT taxpayers below ₱3,000,000 who are not on the 8% income tax option.
Percentage tax due (3%)
Non-VAT taxpayers below ₱3,000,000 (not on the 8% option) pay 3% percentage tax on gross sales/receipts under Section 116.
Under Section 116 of the NIRC, persons who are not VAT-registered and whose gross annual sales/receipts do not exceed the ₱3,000,000 VAT threshold pay a 3% percentage tax on their quarterly gross sales or receipts. It applies to taxpayers who are not exempt and who have not elected the 8% income tax option.
The CREATE Act (RA 11534) temporarily lowered the rate from 3% to 1% for the period 1 July 2020 to 30 June 2023 as COVID-19 relief. It reverted to 3% on 1 July 2023 per BIR RMC No. 69-2023. The rate field above is editable so you can model the historic 1% period if you are reconciling old returns.
Unlike VAT, percentage tax carries no input-tax credits — you pay the flat percentage on gross receipts and cannot offset it with tax on purchases. If you elect the 8% optional income tax, it replaces both the graduated income tax and this percentage tax. And once your gross exceeds ₱3,000,000, check the VAT registration threshold — you must switch to 12% VAT.
Percentage tax is a business tax under Section 116 of the National Internal Revenue Code (NIRC). It is imposed on persons who are not VAT-registered and whose gross annual sales/receipts do not exceed the ₱3,000,000 VAT threshold (and who have not elected the 8% income tax option). It is computed as a flat percentage of quarterly gross sales or receipts, with no input-tax credits — unlike VAT.
The current rate is 3% of quarterly gross sales/receipts, in force since 1 July 2023 (BIR RMC No. 69-2023).
Yes. The CREATE Act (RA 11534) temporarily reduced the Section 116 rate from 3% to 1% for the period 1 July 2020 to 30 June 2023 as COVID-19 relief. It reverted to 3% on 1 July 2023.
Non-VAT taxpayers whose gross sales/receipts do not exceed ₱3,000,000 in a 12-month period pay the 3% percentage tax. Once your gross sales/receipts exceed ₱3,000,000, percentage tax no longer applies — you must register for and charge 12% VAT instead.
Yes. Self-employed individuals and professionals who elect the 8% optional income tax pay it in lieu of both the graduated income tax and the 3% percentage tax — so they no longer file or pay Section 116 percentage tax.
Informational only — not tax advice. This calculator is a general arithmetic aid for the Philippine Section 116 percentage tax. Special rates apply to certain businesses (e.g. common carriers, franchises, banks). Verify with the Bureau of Internal Revenue (BIR) or a qualified Philippine tax professional. See our full disclaimer.
Source: NIRC §116; CREATE (RA 11534); BIR RMC No. 69-2023. As of June 2026.