Tax Exemption of the Operator or Keeper of an Eating Establishment

October 8, 1959 BIR RULING NO. 506-59 The City Treasurer Dagupan City S i r : This is with reference to your letter dated September 9, 1959, propounding the following query: cdtech "With reference to Secs. 182(C) and 191 of Commonwealth Act No. 466 as amended by Republic Act No. 2376, I have the honor to inquire whether or not restaurants and similar eating establishments inside public market places but who sell or serve wines or liquors are exempt from the percentage tax as well as the fixed taxes for retail wine dealer, retail fermented liquor, retail tobacco dealer and the privilege tax of P20.00 as owner of restaurant." In reply thereto, I have the honor to inform you as follows: FOR FIXED TAX PURPOSES . Section 182(C)(2) of the Tax Code, as amended by Republic Act No. 2376 which took effect on June 20, 1959, provides as follows: "(C) Exceptions . The following shall be exempt from the tax imposed in this section: xxx xxx xxx "(2) All Filipinos in public market places selling at retail all forms or kinds of food products, meat, fruits, vegetables, game, poultry, fish and other raw and/or cooked food products: Provided , That the term public market shall include tabu, talipapa and other barrio markets." You will notice from the provision aforequoted that before an operator or keeper of an eating establishment may be exempted from the fixed taxes imposed in the same section, the following requisites must be present: (a) he must be a Filipino; (b) selling at retail all forms or kinds of food products, meat, fruits, vegetables, game, poultry, fish and other raw and/or cooked food products; and (c) he must be selling inside the public market place. FOR PERCENTAGE TAX PURPOSE . Section 191 of the Tax Code, as amended by Republic Act No. 2376, reads as follows: "Sec. 191. . . . "Keepers of restaurants, refreshment parlors and other eating places, except those inside public market places and caterers, shall pay a tax of three per centum of their gross receipts. Keepers of bars and cafes where wines or liquors are served shall pay a tax of seven per centum of their gross receipts: Provided, however , That two sets of sales or commercial invoices or receipts serially numbered in duplicate shall be separately prepared and issued, one for each sale of food or refreshment served and another for each sale of wine or liquor served, the originals of which shall be issued to the purchaser or customer. . . ." The amendment to the second paragraph of section 191 of the Tax Code is corollary to the amendment to section 182(C)(2) of the said Code. It will be observed from the above provisions of the law that the exemption from the fixed and percentage taxes are restricted only to those eating establishments serving purely food products. The exemption does not extend to the sale of wines and liquors. For the sale of wines and liquors, the keepers of the eating establishments concerned are deemed to have effected the same in their capacity as keepers of bars in contra-distinction to their capacity as keepers of purely eating establishments. For the sale of wines and liquors, therefore, they must provide themselves with a C-4-12(a) privilege tax-receipt and pay 7% tax on their sales thereof, pursuant to sections 182 and 191 of the Tax Code, as amended. prcd Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue