Criteria in Determining as to Whether a Place or Resort Falls within the Category of "Day Clubs" or "Nights Clubs"

February 7, 1977 BIR RULING NO. 001-77 Criteria in determining as to whether a place or resort falls within the category of "day clubs" or "nights clubs" This refers to your letter to the Honorable, the Secretary of Finance dated August 24, 1976 requesting to your petition for the reclassification of discotheque from night clubs or super clubs to ordinary restaurants. cdt In your position paper, you differentiate discotheques from night clubs in this manner: "Discotheques are not night clubs. In fact, the two are essentially different. As far as the facilities are concerned, a night club is a lot more plush, bigger place for total luxurious entertainment. Music is live with occasional more popular performers, even imported talents. Live shows and expensive hostesses complete the outfit. With all aspects of entertainment in one roof and very well provided for, a night club is sure to keep its customers at an all time spending spree. In effect, night clubs draw the above average and the high income group. Gross receipts then are considerably high and customers are not very much affected of the very high prices for after all, they are of the higher financial bracket. "Discotheque or disco is a European tradition, coined from the word "disc" which means 'record'. It is a place serving food and drinks without entertainers, hostesses or any other entertainment facilities other than the taped or recorded music and a small dance floor for the dance enthusiasts. Because of the less sophisticated facilities and just the simple relaxing atmosphere, the place draws more of the young groups, the middle and the low, to unwind themselves after a hard day's work, or to relax and enjoy at a minimum budget." In reply, I have the honor to inform you that paragraphs (n) and (o) of Revenue Regulations No. 14-67, otherwise known as the Revised Amusement Tax Regulations provide as follows: "(n) 'Night Clubs' are resorts frequented by pleasure seekers at night where foods and wines and drinks are served and music furnished and the patrons allowed to dance whether with their own partners or professional hostesses furnished by such resorts. "(o) 'Day Clubs' are resorts frequented by pleasure seekers during the day where foods and wines and drinks are served and music furnished and the patrons allowed to dance whether with their own partners of professional hostesses furnished by such resorts." Under the foregoing definitions of a night and day clubs, the criteria in determining whether a place or resort falls within the purview thereof are: 1. The place or resort serves foods and wines and drinks; 2. Music is furnished (whether live or taped or recorded); and 3. Patrons are allowed to dance whether with their partners in or professional hostesses furnished by such resorts. Inasmuch as discotheques serve foods and drinks, furnish taped or recorded music and allow the patrons to dance with their partners in the dance floor, then, they fall under the category of night or day clubs, as the case may be. Such being the case, discotheques are subject to the 20% tax on their gross receipts pursuant to Section 260 of the Tax Code, and not merely to the 3% tax on the sale of foods and 7% on the sale of wines and drinks as prescribed by Section 191-A of the same order. In view of all the foregoing, your request cannot be granted for lack of legal basis. cd