Collection of Amusement Taxes on Certain Services

January 5, 1988 REVENUE MEMORANDUM CIRCULAR NO. 01-88 SUBJECT : Collection of Amusement Taxes on Certain Services TO : All Internal Revenue Officers and Others Concerned Beginning January 1, 1988, the law on Value-Added Tax (VAT) embodied under Executive Order No. 273 goes into effect. However, while sale of services are subject to VAT, there are certain services which are not subject thereto. Among those services are those rendered by proprietors, lessees or operators of amusement places which are subject to amusement taxes under Section 123 (formerly 228) of the Tax Code, as amended by Executive Order No. 273, as follows: 1. 18% in the case of cockpits; 2. 18% in the case of cabarets, night or day club; 3. 15% in the case of boxing exhibitions; 4. 15% in the case of professional basketball games as envisioned in Presidential Decree No. 871; cd 5. 30% in the case of Jai-Alai and race tracks; and 6. 15% in the case of bowling alleys. Considering that the collection of the percentage taxes on amusement places enumerated above has remained despite the imposition of the VAT, there is no longer any doubt that said percentage taxes are collectible by the Bureau of Internal Revenue. The percentage taxes are based on gross receipts irrespective of whether or not any amount is charged or paid for admission. For purposes of the amusement tax, the term "gross receipts" embraces all the receipts of the proprietors, lessors or operators of the amusement places. Hence, said receipts include those derived from admission tickets. (See Sy Chuico vs. Collector, 107 Phil., 428) Accordingly, BIR Ruling No. 231-86 dated November 5, 1986 which ruled that "only the gross receipts of amusement places derived from sources other than from admission ticket shall be subject to 20% (now 30%) amusement tax prescribed under Section 228 of the Tax Code, as amended", is hereby revoked. Likewise, that portion of said ruling which holds that the tax on gross receipts derived from admission tickets obviously issued by the above enumerated amusement places shall be levied and collected by the city government pursuant to Section 13 of Presidential Decree No. 231 is also revoked. It is noted that only the collection of the amusement tax on admission collected from theaters, cinematographs, concert halls, circuses and other places of amusement was transferred to the provinces and cities (Sec. 13, P.D. No. 231; Part V, Provincial Circular No. 22-73, Department of Finance) If the amusement places referred to in Section 123 of the Tax Code are considered included in the places of amusement referred to in Section 13 of P.D. No. 231, then that would render said Section 123 (formerly Section 228) nugatory thereby resulting in tremendous loss of revenue to the National Government. In other words, all the receipts of the proprietor, operator or lessor of the above-enumerated amusement places, which receipts include those derived from amusement tickets are subject to amusement taxes prescribed by Section 123 of the Tax Code, as amended by Executive Order No. 273. These amusement taxes are payable to the Bureau of Internal Revenue. casia Aside from BIR Ruling No. 231-86, all other rulings and decisions inconsistent herewith are hereby revoked. casia All concerned are enjoined to give this as wide a publicity as possible. (SGD.) BIENVENIDO A. TAN, JR. Commissioner