BIR Ruling

January 26, 1970 Mr. Joaquin Cuan c/o Domestic Drive MIA, Pasay City S i r : This refers to your letter dated January 23, 1970 stating substantially as follows: As operator of the Airport Golf Driving Range and Restaurant, you intend to hold, as a promotional measure, bingo games periodically in your establishment. For this purpose, you are to issue and distribute tickets to prospective patrons costing P10.00 per person. This P10.00 ticket will entitle the holder to dinner and one (1) bingo game. You shall issue sales invoices for these tickets and consider the proceeds therefrom as part of the restaurant sales. After the dinner, the patron will buy bingo cards for a certain sum, the proceeds of which shall be used exclusively for the purchase of articles to be awarded to winners. It is manifested that, in certain instances, you may give prizes more than the amount derived from the sale of the bingo cards. casia You now request confirmation of your interpretation that the proceeds from the sales of bingo cards shall not be subject to the sales tax; that any income you may derived from the bingo games shall be subject to income tax; and that if the prizes exceed the proceeds from the sale of the bingo cards, the difference shall be considered as a loss from operations. In reply, I have the honor to inform you as follows: (1) The proceeds from the sale of bingo cards shall not form part of your receipts for purposes of the tax prescribed by Section 191-A of the Tax Code, as last amended by R. A.. No. 6110. In this connection, it may be stated that the tax under Section 191-A is not a sales tax but a tax on the sale of services. (2) Any income you shall derive from the bingo games shall be subject to income tax. (3) Should the prizes exceed the proceeds from the sale of bingo cards the difference shall be considered not as a loss from operations but as a promotional expense. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue