Proper Basis of the 12% Hotel Room Occupancy Tax

October 26, 1987 BIR RULING NO. 329-87 171 000-00 329-87 S i r : This refers to your letter dated July 2, 1987 requesting, in behalf of the members of the Metro Manila Hotels/Motels/Restaurants listed therein, a ruling as to the proper basis of the 12% hotel room occupancy tax prescribed by Section 171 of the Tax Code, as amended. It appears that the members of that Association are operators, proprietors or keepers of motels in Metro Manila which are correspondingly provided with the annual fixed tax of P200.00 each and with their business names, books of accounts and official receipts duly registered with the Bureau of Internal Revenue; that customers in the motels are properly issued official receipts and the corresponding percentage tax returns filed and the tax due thereon paid, that your members likewise maintain within the motel premises separate restaurants where food and drinks are sold; that said restaurants, which have their distinctive signboards properly and conspicuously displayed therein, are open to the public and no person or persons whomsoever is prevented or refused entry therein; that said restaurants/refreshment parlors are also properly provided with the annual fixed tax and other accounting records are duly registered with the Revenue District Officer concerned and others have their separate business names being distinct and separate from the hotel/motel business; and that the gross receipts are properly reported separately for percentage tax purposes and the proper taxes due thereon paid. In reply, please be informed that the 12% tax imposed on proprietors, operators and/or keepers of motels, hotels, etc., is based on gross receipts from room occupancy . (Section 171, Tax Code) This means that said gross receipts consist of payments made by hotel/motel guests for occupying rooms. If said proprietor or operator maintain and operate restaurant not open to public patronage, the cost of food and drinks ordered by and served to the hotel/motel guests shall be included as part of the gross receipts subject to the 12% tax. On the other hand, if the restaurant is open to public patronage, duly advertised, outside the motel premises , all the gross receipts derived from the operation of the restaurant which include the sale of food and drinks ordered by and served to hotel/motel guests, shall be subject to the caterer's percentage tax imposed by Section 172 of the Tax Code. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner