Operation of School Canteen is Subject to Fixed Tax and Caterer's Tax

June 5, 1987 BIR RULING NO. 153-87 172 093-82 153-87 Gentlemen : This refers to your letter dated April 6, 1987, requesting, in effect, exemption from payment of the fixed and percentage taxes for operating a school canteen, bookstore and dormitory. You contended that the operation of those activities is related to, supportive of, and necessary not only to school operation but also as an extension of student services. In reply, I have the honor to inform you that your request for tax exemption for operating a school canteen cannot be granted for lack of legal basis. This Office had ruled that a school is subject to the fixed tax of P100.00 (now P200.00) and 3%( now 4%) caterer's tax imposed by Sections 161(1) and 172 of the Tax Code, as amended, notwithstanding the fact that said canteen is opened for purposes of giving students knowledge and practice in retail merchandising as part of the school curriculum and that sales are made exclusively to the faculty members and students of the school. (BIR Ruling No. 93-82 dated March 30, 1982). Likewise, for operating a bookstore, you are subject to an annual fixed tax of P200.00 and to the 1.5% subsequent sales tax on your sales of books pursuant to Sections 161(1) and 164, both of the Tax Code, as amended. However, as keeper or operator of a dormitory, you are not subject to any internal revenue tax on business. (BIR Ruling No. 353, Series of 1958). Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner