Amendment of Paragraph 11, Subparagraph (b), of General Circular No. V-227, Dated September 7, 1956 (Tax on Restaurants, Bars and Cafes)

October 8, 1962 REVENUE MEMORANDUM CIRCULAR NO. 38-62 SUBJECT : Amendment of Paragraph 11, Subparagraph (b), of General Circular No. V-227, Dated September 7, 1956 (Tax on Restaurants, Bars and Cafes) TO : All Internal Revenue Officers and Others Concerned Paragraph 11, subparagraph (b), of General Circular No. V-227, publishing Republic Act No. 1612, is hereby amended to read as follows: "(b) Tax on restaurants, bars and cafes . The rate of tax on the receipts of keepers of restaurants, refreshment parlors and other eating establishments, now including caterers, remains the same, i.e., at 3%, but the rate of tax on keepers of bars and cafes where wines or liquors are served is increased from 5% to 7%. Only the sales from wines and liquors by said bars and cafes are, however, subject to 7% tax, their sales from food being subject to 3% tax only. The same is true in the case of restaurants and other eating establishments also serving wines and liquors, so that only their sales from wines and liquors are subject to 7% tax and their sales from foods only to 3% tax. For this purpose, said restaurants and other eating establishments, bars and cafes should issue two sets of sales or commercial invoices or receipts serially numbered in duplicate, one for each sale of wine or liquor and another for each sale of food or refreshment served. "Receipts by restaurants and other eating places, whether or not serving wines or liquors, and bars and cafes from the sales of cigars and cigarettes shall form part of their receipts which are subject to 3% tax. "Restaurants, refreshment parlors (regardless of whether or not wines or liquors are served), bars and cafes maintained within the premises of a race track or jai-alai or are accessible to patrons thereof by means, of a connecting door or passage are invariably subject to 20% tax on their gross receipts which include sales of both foods and wines and liquors and to 10% tax where they are similarly maintained or situated within the premises of a cabaret or night club. "During the days, however, when races are not run or when the jai-alai, cabaret or night club is not in operation, such establishments shall be subject to the regular rates of tax, that is, 3% on their sales of foods and 7% on their sales of wines and liquors. Night clubs may operate as restaurants, bars or cafes in the day time when they are not in operation as such. For this purpose, such establishments should keep separate sets of books and records and issue separate sales slips or invoices covering their receipts when races are not run or when the jai-alai or cabaret or night club is not in operation, as the case may be. "The exemption from tax of contractors whose gross quarterly receipts do not exceed P200.00 was removed. Accordingly, contractors within the purview of section 191 are now subject to tax, regardless of the amount of their gross monthly receipts. "The exemption from the tax imposed in the first paragraph of section 191 of the Tax Code of owners or operators of businesses covered by franchises was likewise removed. The taxability of such franchise grantees shall, therefore, be determined in accordance with the provisions of their franchises in relation to section 259 of the Tax Code." Nature of the Amendment Under this amendment the second paragraph of subparagraph (b), paragraph 11 of General Circular No. 227 was amended by subjecting in all cases the proceeds from the sales of cigars and cigarettes by bars and cafes, restaurants, refreshment parlors and other eating places to the tax at the rate of 3% only. aisadc All internal revenue officers are hereby enjoined to be guided accordingly and to give this circular as wide a publicity as possible. (SGD.) JOSE B. LINGAD Acting Commissioner of Internal Revenue