BIR Ruling

September 12, 1972 MANILA FEDERATION OF PARENT-TEACHER ASSOCIATIONS, INC. The EXAMINER News Magazines Building 67 Dr. Alejos St., Quezon City Attention: Mr . Magdaleno L . Petrasanta President Gentlemen : This refers to your letter dated July 24, 1972 requesting for a ruling as to the liability to the payment of taxes of canteens located in public schools under the Division of City Schools of Manila. It is stated that each of the 26 high schools and the 68 elementary schools has its own school canteen that serves food and miscellaneous items like soft drinks, milk, fruits and native delicacies to students, teachers, school personnel, employees of government and private offices, or simply any outsider at any time of the day or night; that the capital investment could not, however, be ascertained and how the profits are distributed or appropriated is also vague, although the cash sales are reported to and kept by the school principal and the records of the sales, purchases and expenses are kept by the assistant principal of the same school. In reply thereto, I have the honor to inform you that each and every canteen of the Division of City Schools of Manila is subject to the annual fixed tax of P50.00 and to the caterer's tax of 3% of their gross receipts pursuant to Sections 182(A)(1) and 191-A(1), respectively, in relation to Section 178, all of the Tax Code, as amended. These taxes shall be paid by the operator or proprietor of the canteen. The operators of the canteen must issue invoices or receipts serially numbered in duplicate and shall keep books and accounting records as are required by Revenue Regulations No. V-1, otherwise known as the Bookkeeping Regulations. Moreover, the income derived from the operation of the canteens is subject to the income tax prescribed in Section 24 of the Tax Code. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue