Determination of Gross Receipts for Purposes of the Caterer's Tax Under Section 206 of the Tax Code

July 31, 1980 REVENUE MEMORANDUM CIRCULAR NO. 34-80 SUBJECT : Determination of Gross Receipts for Purposes of the Caterer's Tax Under Section 206 of the Tax Code TO : All Internal Revenue Officers and Others Concerned It has been observed that in restaurants, refreshment parlors and other eating places, proprietors or operators thereof issued invoices or receipts wherein the caterer's tax imposed by Section 206 of the Tax Code is billed as separate item as follows: Food P100.00 3% tax on P100.00 3.00 Total amount paid P103.00 ======= Our attention has been called to the effect that under the above example, said proprietor or operator considers only the amount of P100.00 as his gross receipts upon which the caterer's tax is based. Such determination of the gross receipts is erroneous. (Araas Annotation and Jurisprudence on the National Internal Revenue Code of 1977, Vol. II, p. 301) aisa dc The caterer's tax imposed by Section 206 of the Tax Code, like the contractor's tax imposed in Section 205 of the same Code, being as excise tax is directly imposed on and collectible from the person exercising the privilege as operator or proprietor of restaurants, refreshment parlors and other eating places. While the burden of the tax may be shifted to the customer, said proprietor or operator is not relieved from payment of the tax on his gross receipts. Such being the case, and considering that the caterer's tax is based on gross receipts which means the entire amount received, said tax even if shifted to the customer, still forms part of the caterer's taxable gross receipts. Thus, under the above example, the amount of P103.00 actually received by the proprietor or operator shall be the basis of the 3% tax and not only on the P100.00. This Circular is being issued to clarify, emphasize and reiterate the position of this Office. It is requested that this Circular be given as wide a publicity as possible. RUBEN B. ANCHETA Acting Commissioner