BIR Ruling

December 14, 1976 The Nutrition Foundation of the Philippines, Inc. 107 E. Rodriguez, Sr. Blvd., Quezon City P. O. Box 3870 Manila Attention: Mr . Juan Salcedo, Jr . Chairman-President Gentlemen : This refers to your letter dated November 12, 1976 stating that on the invitation of the Progressive Mason Club, Inc. of 467 San Fernando St., Manila, the Movie Stars Art Troupe of Hongkong is arriving in Manila to hold a 3-day billing of their repertoire; that the Troupe will perform under the Club's fund raising venture scheduled on November 26-28, 1976; that their stay in Manila is being arranged and paid for by the principal promoter and host which is the Mason Club, with the Cultural Center of the Philippines and the Folk Arts Theater co-sponsoring the project; and that the proceeds from the performances after deducting all expenses incurred by the Troupe will be donated by the Progressive Mason Club to the Nutrition Foundation of the Philippines for public health nutrition activities and other humanitarian projects. cdta Under the foregoing circumstances, you now request the following: 1. Exemption from the payment of percentage taxes on the hotel accommodation of the members of the Troupe; and 2. Exemption of the proceeds from the performance from the amusement and donation taxes. In reply, I have the honor to inform you as follows: The 3rd and 7% taxes levied on the gross receipts from the sale of food and drinks which will be served to the Movie Stars Art Troupe in accordance with Section 191-A of the Tax Code, and the 3% tax on hotel receipts prescribed in Section 191 of the same Code, are taxes directly payable by the hotel operator and not the sponsoring Mason Club which incidentally foots the bill of the visiting Art Troupe. Consequently, your request for exemption from the payment of the said taxes is hereby denied. It may be stated in this connection, that the exemption from the internal revenue and science and documentary stamp taxes on hotel receipts and the 3% percentage tax on the hotel revenue from the hotel room occupancy granted by Presidential Decree No. 31, as implemented by Revenue Regulations No. 10-72 dated November 8, 1972 is accorded only to foreign tourists and travellers and only if the payment of the hotel room charges is effected in any of the acceptable foreign currencies. As regards the amusement tax on admission receipts or proceeds which will be derived from the performance of the visiting Troupe, please be advised that amusement tax on admission had been transferred to the local government under P.D. No. 231. As regards your request that the donation of the proceeds of the performances to that Foundation be exempted from donor's gift tax, since it is represented that you are a social welfare and charitable organization, before exemption may be availed of, it is necessary that you must first establish yourself as a qualified donee or legatee, as required by Revenue Regulations No. 8-74 implementing Presidential Decree No. 507. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3