Sole prop: 8% or graduated?

3 quick questions. Pick an answer to see why.

1. Liza, a non-VAT sole proprietor with no salary, sold ₱2,400,000. What's her tax under the 8% option?

₱192,000 ₱172,000 ₱172,000 plus 3% percentage tax

8% of sales above ₱250,000: (₱2,400,000 − ₱250,000) × 8% = ₱172,000. It replaces the 3% percentage tax, so nothing is added.

2. Ben sells ₱2.4 million at a 10% margin, so his profit is ₱240,000. Which option costs him less?

Graduated rates plus 3%: ₱72,000 The 8% option: ₱172,000 They cost the same

His profit sits inside the tax-free first ₱250,000, so he pays only the 3% percentage tax. The 8% is on sales and ignores his thin margin.

3. When does an existing sole proprietor choose the 8% option for the year?

On the annual return the next April On the first-quarter return of the year Any time the sales pass ₱3 million

The choice is made on the first-quarter return (the 1701Q due 15 May, or the first-quarter 2551Q) and holds for the year. Past ₱3 million, the 8% ends.

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