Business Tax Liabilities of Travel Agencies

April 15, 1980 REVENUE MEMORANDUM CIRCULAR NO. 22-80 SUBJECT : Business Tax Liabilities of Travel Agencies TO : All Internal Revenue Officers and Others Concerned Reports reaching this Office reveal that newly established travel agencies provide themselves only with one privilege tax (PTR) as contractor upon payment of the annual fixed tax of P100 under Section 192(1), in relation to Section 205(16), of the Tax Code of 1977, as amended. It has been observed however, that these travel agencies, aside from following up travel papers of clients for which they are considered business agents subject to the contractor's tax, also negotiate for airlines the transportation of their clients. From this latter activity, the travel agencies receive commission which is subject to the 6% percentage tax as they are commercial brokers under Section 187(t), in relation to Section 208, of the Tax Code. Such being the case, aside from the fixed tax of P100, they are also subject to a fixed tax of P1,000, pursuant to Section 192(3) (bb) of said Code. In other words, a travel agency is subject to two (2) fixed taxes, one as a contractor for services rendered to its clients and another as broker for negotiating or bringing about the sale of airline tickets to its passengers. In order to maximize the collection of taxes from travel agencies all revenue personnel concerned should see to it that the books of accounts of travel agencies are not registered unless they show proof of payment of both fixed taxes aforementioned. cd i It is desired that this Circular be given as wide a publicity as possible. EFREN I. PLANA Acting Commissioner