Manner of Computing the Sales Tax Charged to Guests

July 24, 1995 BIR RULING NO. 114-95 114 000-00 114-95 EDSA Plaza Hotel 1 Garden Way Ortigas Center Mandaluyong City Attention: Ms . Ma . Theresa C . Valderrama Financial Controller Gentlemen : This refers to your letter dated May 1, 1995 wherein you informed this Office by way of reply to the query of Ms. Lorrie Gamalinda, regarding the manner of how you compute the sales tax which you charge to your guests. cdti In connection therewith, please be informed that your computation of the caterer's tax as shown in your examples is not correct. You should not subject to another round of 4% sales tax the 4% caterer's tax. On the other hand, the 10% service charge should form part of the gross receipts for purposes of computing the caterer's tax, as shown in the foregoing illustration: Food P100.00 10% service charge 10.00 Total amount paid P110.00 4% tax P4.40 Beverage P100.00 10% service charge 10.00 Total amount paid P110.00 8% tax P8.80 ====== If you will bill as separate item the amounts of P4.40 and P8.80 to your customers, the same should form part of your taxable gross receipts for purposes of computing the caterer's tax imposed under Section 114 of the Tax Code. (Revenue Memorandum Circular No. 34-80 dated July 31, 1980). Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue