Gross Receipts of a Taxicab Operator Under the "Boundary System"

1970 BIR RULING NO. 018-70 Gross Receipts of a Taxicab Operator Under the "Boundary System" Facts: Company, a corporation duly organized under the laws of the Philippines, is authorized to operate 20 units of taxi-cab in the province under a Certificate of Public Convenience granted in its favor by the Public Service Commission. After operating for a couple of years at a loss, and to avoid further losses due to the rampant practice by its drivers of not flagging down the taxi meters which practice they find very difficult to apprehend or stop, it was decided to operate the units on the so-called "boundary system". By this system, the corporation leases out the units daily to its drivers at a fixed rate of P12.00 per day during daytime and P20.00 per day during night time. The corporation shoulders the cost of oils, servicing, repairs, etc. while the gasoline is for the account of the driver-leases. For the proper preservation of its units, employing the necessary personnel thereto. cdt The company is not in a position to know what is the true gross income that an operating unit earns daily since the drivers refuse to give the true information to the management. As long as they pay the agreed daily rate, the drivers feel that they do not have to furnish the company any further information. It is estimated though that the daytime drivers make an average of about P25.00 while the night shift average about P35.00. Ruling: For purposes of the 2% tax imposed by Section 192 of the Tax Code, as amended by Republic Act No. 6110, the gross receipts of the taxicab company consist of the total amount of earnings derived from the operation of its taxicabs without any deduction. These gross receipts therefore, consist of the amounts representing the so-called boundary, the earnings of the drivers, expenses for gasoline which under the foregoing representation is for the account of the driver-lessee, and other expenses taken from the total earnings derived in the operation of the taxicabs. (BIR Ruling No. 66050. Oct. 26, 1966). Consequently, since it is represented also that the daily average earning of each daytime driver is P25.00 while that of the nighttime driver is P35.00, those amounts represent the daily gross receipts for each taxicab for purposes of the percentage tax of 2% imposed under Section 192 of the Tax Code, as amended. In this connection, Section 192 of the tax Code, as amended, also provides that, in computing the percentage tax provided therein, the following shall be considered the minimum monthly gross receipts for taxes: 1. Manila and other cities P600.00 2. Provincial 400 In other words, the actual gross receipts derived in the operation of the taxicab should be declared for 2% purpose but not less than the above minimum monthly gross receipts.