Applicability of RMC No. 4-98 to Operators/Drivers of Motorized Tricycles for Hire in Kalibo, Aklan

December 22, 2000 BIR RULING NO. 073-00 236 (B);RMC No. 4-98 098-99 Atty. Arnaldo M. Tejada SB Member & Chairman, Law, Rules and Ordinances Kalibo, Aklan S i r : This refers to your letter dated August 18, 2000 requesting for a ruling that Revenue Memorandum Circular No. 4-98 re exemption of subsistence livelihood from the payment of Value-Added Tax (VAT) or percentage tax and/or payment of registration fee under R.A. 8424 be made applicable to operators/drivers of motorized tricycle for hire in Kalibo, Aklan. You have stated in your letter the following: "1. That in the Municipality of Kalibo, no less than 2,000 franchises were granted to owners/operators/drivers of motorized tricycle for hire under Motorized Tricycle Operators Permit allowed by R.A. 7160, the Local Government Code. "2. That the Owners/Operators/Drivers do not operate their units on full day but only on part time, when commuters are plenty and/or market days and when they feel like making little earnings to buy gasoline or help support their family needs; and "3. That the drivers charge the allowable transportation fare of P3.00 per passenger and no amount of operation can this motorized tricycle accumulate a gross sales or receipts of P300.00 a day even at full time operations or accumulate more than P7,500.00 a month, assuming the maximum receipt of P300.00 a day at 25 days a month of operation, and this situation can easily be checked or verified by your local Revenue Officers in Kalibo, Aklan, if necessary." In reply, please be informed that pursuant to Revenue Memorandum Circular No. 4-98 supplementing Revenue Regulations No. 7-95, the term "in the course of business" was further qualified in the light of the declared policy of the government to provide, as much as possible, an equitable relief to a greater number of taxpayers in order to improve levels of disposable income and increase economic activity. Hence, this Office held that "any business or businesses pursued by an individual where the aggregate gross sales or receipts do not exceed P100,000.00 during any 12-month period shall be considered principally for subsistence or livelihood and not in the course of business." Accordingly, the owners/operators/drivers of motorized tricycle for hire in Kalibo, Aklan are among those individual taxpayers qualified under the aforesaid definition, although still required to register, they shall nevertheless be exempted from the payment of registration fee as prescribed under Section 236(B) of the Tax Code of 1997, and from the payment of value-added tax (VAT) under Title IV, Chapter I and percentage taxes under Title V, both of the same Code, in accordance with Revenue Memorandum Circular No. 4-98 dated January 21, 1998. (BIR Ruling No. 098-99 dated July 8, 1999) SCEDAI This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue