Tax Liability of VAT-Registered Entities Engaged in the Sale of Services as Travel and Tour Agents

February 15, 1988 BIR RULING NO. 047-88 102 (a) 000-00 047-88 Gentlemen : This refers to your letter dated December 9, 1987 stating that your company and branches are VAT-registered entities engaged in the sale of services as travel and tour agents and based thereon you request clarification on two points: cdta 1. Whether the value-added tax of 10% should be based on earnings derived from your commissions on the sale of tickets and service fees on your sale of local tours. 2. Whether you are exempt from the VAT on your dollar income from the sale of services of in-bound tours and dollar commissions on your sale of airline tickets to foreigners which are accounted for in accordance with Central Bank regulations. In reply, please be informed as follows: 1. The aggregate of commissions on your sale of tickets and service fees on your sale of local tours are subject to the value-added tax of 10% as they are embraced within the term "gross receipts" as defined in Section 102(a)(3) of the Tax Code, as amended, stating: " Gross receipts " means the total amount of money or its equivalent representing the contract price, compensation or service fee, including the amount charged for materials supplied with the services and deposits or advance payments actually or constructively received during the taxable quarter, for the services performed or to be performed for another person excluding the value-added tax. 2. Dollar income from your sale of services for in-bound tours and dollar commissions on your sale of airline tickets to foreigners which are accounted for in accordance with Central Bank regulations are, however, subject to the value-added tax of 0% pursuant to Section 102(a)(2) of the Tax Code, as amended by Executive Order No. 273. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner