Determination of Room Receipts Subject to 3% Tax

June 20, 1960 BIR RULING NO. 297-60 Mr. Modesto Hilario Auditor, Manila Hotel Company M a n i l a S i r : In answer to your letter dated May 15, 1960, I have the honor to inform you the following: cd A. On the determination of Room receipts subject to 3% tax: 1. The rentals received from a houseguest who rents a regular hotel guest room on fixed monthly rate, usually for several months period, is subject to the 3% tax. 2. For the lease of its rooms, the hotel is not considered a real estate dealer. The lease of such rooms is precisely comprised within its hotel business. The hotel operator, may, however, be considered a "real estate dealer" for the lease for real properties not connected with his hotel business. B. On the determination of Restaurant Sales subject to 3% tax: 1. The receipts derived from food served not in the restaurant dining room, but in the houseguest's room (mostly to permanent houseguests) are subject to the 3% tax, said receipts being nevertheless considered receipts of the restaurant. 2. The gross receipts derived from food served to exclusive parties held elsewhere in the hotel not in the regular dining room but in the convention hall, pavilion, or special meeting room are also subject to the 3% tax for the same reason stated above. 3. Receipts derived by the hotel as a caterer is likewise subject to the 3% tax. C. On the determination of Bar Sales subject to 7% tax: 1. The sales of the bar of hard drinks are subject to 7% tax, and its sales of soft drinks are subject to 3% tax. 2. The sale of hard drinks from the hotel storeroom as "Rolling Bar" is also subject to the 7% tax. D. Percentage Tax on Other Income: For operating a cigar and candy store and recreational facilities such as bowling alleys and tennis court as separate departments for the convenience of its houseguests, the hotel is subject to the following: 1. Candy store, to the graduated fixed annual tax (C-12). 2. Cigar and cigarette, to the retail tobacco dealer's tax (B-9)(a). 3. Bowling alleys and the tennis court, no fixed or percentage tax. All receipts of the hotel from all the items covered above must be reported for the income and residence taxes. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue