Tax Liability of an Operator or Proprietor of a Refreshment Parlor or Eating Place and a Take-Out Counter

October 16, 1990 BIR RULING NO. 199-90 114 038-88 199-90 Gentlemen : This refers to BIR Ruling No. 114-012-88-038-88 issued to you on February 11, 1988, stating that as an operator or proprietor of a refreshment parlor or eating place where you also maintain a take-out counter, your combined gross receipts from your operation of both refreshment parlor or eating place and take-out counter is subject only to the 4% caterer's tax. The sales in the take-out counter are not subject to the 10% value-added tax pursuant to Section 103 (j) of the Tax Code, as amended by Executive Order No. 273. In connection therewith, please be informed that after a restudy of the facts subsequently gathered and pertinent laws, this Office finds the above ruling devoid of legal and factual bases. Investigation disclosed that your establishment is primarily a bakery, maintaining coffee shop or eating place with take-out counters within the establishment; and that in fact, most of your customers patronize your establishment, not to eat but to buy cakes, pastries, and the like. Accordingly, while you are subject to the 4% caterer's tax on your operation of a refreshment parlor or eating place pursuant to Section 114 of the Tax Code, you are also subject to 10% VAT as a bake shop on your operation of a take-out counter pursuant to Section 100 (a) of the Tax Code. In other words, since you are in effect operating two lines of businesses, you will register as a Non-VAT taxpayer for your refreshment parlor or eating place pursuant to Revenue Regulations No. 6-88; and as a VAT taxpayer for your operation of a take-out counter pursuant to Section 18 of Revenue Regulations No. 5-87. However, if your sales from your take-out counter do not exceed P200,000.00 in any 12-month period, you may opt not to register as a VAT taxpayer in which case your receipts therefrom shall be subject only to 2% percentage tax pursuant to Section 112 of the same Code. cdta Very truly yours, (SGD.) JOSE U. ONG Commissioner