BIR Ruling

July 10, 1969 Warner Bros. Seven Arts (F. E.), Inc. P.O. Box 2489, Manila Attention: E . P . Valencia Accountant & Office Manager Gentlemen : This refers to your letter dated April 28, 1969, stated as follows: "We come to respectfully request your good office to please confirm the correct tax computation on the gross admission of P1.00 at the Roxy Theater, Davao City. "The local office of the Bureau of Internal Revenue in Davao City has been computing the tax as follows: Gross Admission Insular Tax Municipal Tax Net Admission P1.00 P0.16 P0.05 P0.79 "Based on your previous ruling, the correct tax computation should be: P1.00 P0.14 P0.05 P0.81" In reply, I have the honor to quote hereunder, for ready reference, the first paragraph of Section 260 of the Tax Code, as follows: "Sec. 260. Amusement taxes . There shall be collected from the proprietor, lessee, or operator of theaters, cinematographs, concert halls, circuses, and other places of amusement the following taxes: Admission Price: Taxes: .21 to .29 .04 .30 to .39 .06 .40 to .49 .08 .50 to .59 .10 .60 to .69 .12 .70 to .79 .14 .80 to .89 .16 .90 to .99 .18 1.00 and over 30% In applying the above rates of amusement taxes to the different brackets of admission fees, the basis should be the price of admission exclusive of both the national and municipal amusement taxes. In the determination of the proper bracket, the amount of the tax should first be deducted from the amount of admission indicated on the face of the admission tickets. Thus if the price paid for admission as indicated on the face of the ticket is P1.00 including a national tax of P0.14 and the municipal tax of P0.05, the basic admission fee is P0.81. The amount of tax on this admission is P.16. If the theater intended to fall within the tax bracket of only P.14, it should have charged a maximum of only P.98, the sum total of the maximum admission fee with the tax bracket of P79 and the national tax of P.14 and municipal tax of P0.05. Since the theater charged an actual basic admission fee of P.81, the amusement tax that is properly payable by it is P.16. Under this tax bracket however, the theater can charge a maximum admission fee of P1.10 including the national and municipal taxes. LibLex Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue