Whether the Folk Arts Theater Is Entitled to the Refund of the Percentage Taxes on Food and Beverages Paid

May 27, 1986 BIR RULING NO. 070-86 171 012-85 070-86 Gentlemen : This refers to your letter dated November 27, 1985, requesting a ruling as to whether the Folk Arts Theater is entitled to the refund of the percentage taxes on food and beverages paid to you in view of the tax exemption under Letter of Instructions (LOI) No. 1431 and Section 13 P.D. No. 15 as amended by P.D. No. 1444. You also requested that the said ruling be made applicable to room accommodation charges. In reply, please be informed that under Section 13 of P.D. No. 15, as amended, the Cultural Center of the Philippines which includes the Folk Arts Theater, is "exempt from all forms of taxation". The scope of this tax exemption privilege is that it covers only taxes for which it is directly liable and not on taxes which are only shifted to it. (BIR Ruling No. 186-85 dated Oct. 22, 1985) The 12% hotel room occupancy tax on room accommodations charges, the 4% tax on food as well as the 8% tax on distilled spirits, fermented liquors and wines imposed by Sections 171 (formerly 205-A) and 172 (formerly 206) of the Tax Code, as amended by P.D. No. 1994 are taxes imposed on proprietors, operators, or keepers of hotels, motels, rest houses, pension houses, lodging houses, resorts, restaurants, refreshment parlors and other eating places. In other words, the hotel room occupancy tax, the 4% tax on food as well as the 8% tax on distilled spirits, fermented liquors, and wines are directly payable by the said establishments. Therefore, the fact that the said taxes may ultimately be shifted to or passed on to the Folk Arts Theater will not constitute the same as tax payable by Folk Arts Theater for purposes of tax exemption under P.D. No. 15, as amended. In view thereof, the Folk Arts Theater is not entitled to the refund of the aforesaid taxes being claimed by it. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner