Whether the Amount of P430.00 and 250.00 Received by Hotel Inter-Continental Manila from Its Customers during Monday Evenings are Subject only to the 4%-8% Caterers Tax (or 10% VAT under R.A. 7716)

July 10, 1995 BIR RULING NO. 103-95 114 123 000-00 103-95 Sycip Gorres Velayo & Co. 6760 Ayala Venue, Makati Metro Manila Attention: Atty . C . P . Noel Tax Division Gentlemen : This refers to your letters dated November 8, 1994 and January 9, 1995 stating that your client, Hotel Inter-Continental Manila operates Bahia Rooftop Restaurant; that the restaurant regularly serves food, beverages, wines and liquors both day and night; that it likewise serves dinner buffet which is priced at P430.00; that the restaurant provides ballroom dancing music every Monday and Thursday evenings for the listening pleasures of its guests; that those who would like to dance may do so; that your client hired professional dance instructors (male and female) for those who would like to know the steps in ballroom dancing; that your client pays the services rendered by the instructors and does not charge anything from its customers; that the restaurant does not impose any admission fees even on Monday evenings; that guests may either pay P430.00 for the dinner buffet or if they do not wish to have the buffet, they are required to pay a minimum amount of P250.00 which entitles them to two drinks. In connection therewith, you are requesting confirmation of your opinion that the amount of P430.00 and 250.00 received by your client from its customers during Monday evenings are subject only to the 4%-8% caterers tax under Section 114(2) of the Tax Code, as amended (or 10% VAT under R.A. 7716); and that your client is not liable to the 18% amusement tax under Section 123 of the Tax Code, as amended, since its restaurant is not considered a night club. In reply thereto, please be informed that your opinions are hereby confirmed. Paragraph (n) of Revenue Regulations No. 14-67, otherwise known as the Revised Amusement Tax Regulations defines "Night Clubs" as resorts frequented by pleasure seekers at night where foods, wines and drinks are served and music furnished and the patrons allowed to dance whether with their own partners or professional hostesses furnished by such resorts. The said definition of "Night Club" implies regularity or continuity of the business operation. Moreover, amusement tax is a percentage tax imposed on the privilege of engaging or pursuing an occupation, calling or professional; thus, conveying the idea of progression, continuity or sustained activity. (Imperial vs. Collector, L-7924, September 30. 1995) Considering that the Bahia Rooftop Restaurant is principally a restaurant/dining room, its provision of a ballroom dancing music every Monday and Thursday evenings, for the listening pleasures of its guests and that those who would like to dance may do so, did not convert the restaurant into a nightclub. Such being the case, the gross receipts of the Bahia Rooftop Restaurant every Monday and Thursday evenings are subject only to the 4% tax on sale of foods and 8% tax on the sale of drinks pursuant to Section 114(2) of the Tax Code, as amended. The restaurant is not subject to the 18% amusement tax under Section 123 of the Tax Code, as amended and as implemented by Revenue Regulations No. 14-67. LLphil Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue