What is OPT?
Other Percentage Tax or OPT is a business tax imposed on INDIVIDUALS or BUSINESSES that sell or lease goods or services with an annual revenue that doesn’t exceed P3 million and is NOT VAT registered. Thus, this can apply to a broad range of groups from professionals to sole proprietors or even corporations. If you belong to the aforementioned category and have not opted for the 8% income tax rate on gross sales and receipts, your BIR Certificate of Registration (COR) must indicate the OPT as one of your tax types.
Who is this for?
Noteworthy, there are two groups that fall under OPT. The first group is for those whose activities are VATABLE, but their gross sales do not go beyond the P3 million threshold. Examples are most startups and professionals like freelancers, doctors, bloggers etc. It also includes those who lease residential units for more than P15,000 but the total rentals will not exceed P3 million.
The second group is for those where OPT applies whether they reach the VAT P3 million threshold or not. These are businesses whose activities are designated under OPT system. Some examples are domestic carriers, keepers of garages, franchise grantees of water or gas utilities, lessees or operators of cockpits and racetracks, banks and finance companies. The rate for this group may also vary depending on the circumstances. Check out BIR website for a full list of the rates.
Noteworthy, individuals and businesses must note that as soon as their sales exceed the P3 million threshold, they need to update their registration right away from OPT to VAT. Those who fail to do so will be held liable for 12% output VAT but with no benefit of claiming input VAT. This means the amount paid to the BIR will be higher because allowable exemptions cannot be deducted.
How is the Quarterly OPT Calculated?
Those who fall under this category must file their quarterly OPT by multiplying 3% of their quarterly gross income receipts. These receipts refer to all earnings, income, or revenue anyone receives from a client. Consider the sample computation of what is due and payable below.
For example, you are a doctor, and your clinic earns P3 million or less yearly. You then receive a quarterly income from your patients, amounting to P200,000. If you’ve opted for the OPT option (as seen in you COR), the calculation is:
Quarter Percentage Tax Due = Gross Receipts x 3%
P200,000 x 3% equals P6,000
Therefore, your total payable due to the BIR is P6,000 for that quarter.
Where and When to File?
Fill out BIR Form 2551Q then file within 25 days after the end of each taxable quarter. The deadline is every 25th of January, April, July, and October. You can file your OPT using the following methods:
Through the Electronic Filing and Payment System (eFPS) here: https://efps.bir.gov.ph/
Another method is by downloading the latest Electronic BIR Forms (eBIRForms) in this portal: bir.gov.ph/index/eservices/ebirforms and printing the filed returns thereof
How to Pay Tax Dues?
There are there (3) ways to pay your OPT using manual or online payment methods:
• eFPS Online Banking for those who are registered
• Accredited agent bank (AAB)
• Other payment partners like GCash, Paymaya, Landbank, and Union Bank.
Here’s a video on How to File Your Other Percentage Taxes (OPT)
Whether traditional or online payment, you need to manually calculate your dues before paying because you need to remit the exact tax amount. Failure to pay on time and any miscalculations made will incur you a 25% surcharge, a 6% annual interest, and a compromise penalty fee based on the revised table of penalties. It will be more cost-efficient to secure the help of a CPA to ascertain everything is done correctly, saving you time, money, and energy. You also must keep in mind that Tax Regulations constantly change. If you find yourself struggling with the forms and staying updated, our team would be glad to help you.
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