Fee Collected from Passengers who Occupies Space in a Terminal Building Form Part of the Company's Gross Receipts

May 17, 1991 BIR RULING NO. 086-91 115 000-00 086-91 S i r : This refers to your letter dated January 21, 1991, stating that a company has leased from the Government one (1) motored ferry boat to ferry passengers across the sea and two (2) terminal buildings; and that the company charges P5.00 for every passenger who occupies a space in the terminal building for two (2) days while waiting for the ferry boat to arrive. On the basis of the foregoing, you want to know if aside from income tax and 3% common carrier's tax which the company normally pays, the latter is still liable to pay value-added tax on the receipts derived from those passenger-occupants of the terminal buildings. In reply, please be informed in the negative. The 5.00 fee per passenger-occupant of the terminal buildings which the company collects is merely incidental to its main business of transporting passengers. It is safe to conclude that the operation of the terminal buildings is clearly intended to provide for the needs, comfort and convenience of the passengers and not for profit. However, the said fee shall form part of the company's gross receipts for the purposes of the 3% common carrier's tax imposed under Section 115 of the Tax Code, as amended. aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner