4% Caterer's Tax Imposed in Operating a Small Group of Eating and Take Out Counters

January 28, 1988 BIR RULING NO. 012-88 114 000-00 012-88 Gentlemen : This refers to your letter dated January 14, 1988 requesting a ruling as to whether or not you are subject to the 10% value-added tax. You have represented that you are operating a small group of eating and take out counters in Legaspi Village, selling sandwiches and pastries to office employees; that to save on raw material costs, you bake your own bread together with other bakery products which you sell. In reply, please be informed that under the foregoing facts, you are an operator or proprietor of a refreshment parlor or eating place; hence, your gross receipts are subject to the 4% caterer's tax under Section 114 (formerly Section 171) of the Tax Code, as amended by Executive Order No. 273. However, a take out counter is considered incidental to the operation of an eating place which is the main line of business. In other words, the take out counter is not ordinarily taxed as an independent business, in which case, the sales in said counter forms part of the gross receipts of the operator of the eating place subject to the 4% caterer's tax. Such being the case, the sales in the take out counter are not subject to the 10% value-added tax pursuant to Section 103(j) of the Tax Code, as amended by Executive Order No. 273. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner