Taxability of Bowling Sport

March 18, 1988 BIR RULING NO. 112-88 126 000-00 112-88 Gentlemen : This refers to your letter dated March 2, 1988 requesting in effect confirmation of your opinion that bowling is a sport not subject to the 15% amusement tax and/or 10% value-added tax (VAT). You have represented that Coronado Lanes, Inc. is a domestic corporation organized under the laws of the Philippines operating bowling centers in Metro Manila; that Coronado's bowling centers have been instrumental in the development and promotion in bowling as a sport in which the Philippines has won many honors in international competition; that in recent years, Filipino bowlers like Paeng Nepomuceno and Bong Coo have become world champions, thus bringing honor to our country; that bowling as sport is now represented in the Philippine Olympic Committee, and has become an official event in the South East Asian Games and the Asian Games; that many employees both in the government and private firms organize bowling tournaments as part of their physical fitness program; and that apparently, there is a mistake in including bowling alleys as an amusement place subject to amusement taxes since Section 123 (formerly Section 228) of the Tax Code was already classifying bowling as a sport. In reply, please be informed that the findings of this Office disclosed that amusement tax at the rate of 10% was imposed for the first time on bowling alleys, together with boxing exhibitions and professional basketball games pursuant to P.D. No. 1456 effective June 11, 1978 by amending then Section 268 of the Tax Code. (Revenue Memorandum Circular No. 47-78) It appears also that under Section 268 of the Tax Code, as amended by P.D. No. 1459 effective October 15, 1984, bowling alleys were subject to amusement tax at the rate of 15%. However, under Letter of Instruction No. 1504 dated December 29, 1985, bowling was classified as a sport and "bowling alleys shall therefore not be subject to the amusement tax and shall be deleted from Section 268 of the National Internal Revenue Code." (Official Gazette Vol. 81, No. 51) Thereafter, under Section 39 of P.D. No. 1994 effective January 1, 1986, said Section 268 was renumbered to Section 228 and the second paragraph thereof was amended which relates to the time for filing the amusement tax return and payment of the tax due thereon. In other words, there was no amendment in said P.D. No. 1994 insofar as the amusement places subject to amusement tax are concerned. Subsequently, under Sections 23 and 24 of Executive Order No. 273 of the Value-Added Tax law, said Section 228 was renumbered as Section 123 and placed under Title V of the Tax Code under "Other Percentage Taxes". In other words, the amendments introduced by Executive Order No. 273 did not also disturb the list of amusement places subject to tax under Section 123 thereof. Accordingly, it is safe to conclude that the deletion made by LOI No. 1504 of bowling alleys from the list of amusement places subject to amusement or percentage taxes still stands as of this date. Such being the case, bowling alleys are not subject to percentage (amusement) tax imposed by Section 123 of the Tax Code, as amended by Executive Order No. 273. Neither are bowling alleys subject to the 10% value-added tax in view of its classification as a sport, and, therefore, not a business enterprise, and the government's recognition as a matter of national policy the development of sports and the encouragement of the people's participation in sports. (See Whereas Clause of LOI No. 1504). Under Section 99 of the Tax Code, only those persons selling goods or rendering service in the course of trade or business are subject to the value-added tax which is not so in the case of bowling alleys. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner