VAT Ruling No. 073-91

August 5, 1991 VAT RULING NO. 073-91 Ultimate Entertainment No. 56 Madison St. Mandaluyong, Metro Manila Attention: Sol . C . Luga, Office Manager S i r : This refers to your undated letter which was filed with our Planning & Research Division on July 30, 1990, advising that you are a sole proprietorship; that your primary purpose is to produce musical concerts for local and foreign artists, either for live audience or through the television media; that your secondary purpose is to manage local talents. Your question is whether your said primary and secondary business activities are subject to the 10% value-added tax. Please be informed that your production of live concerts involves the rendering of amusement services. Under Sections 11 and 13 of the Local Tax Code the jurisdiction to impose amusement tax on gross receipts from admission to places of amusement " shall henceforth be exercised by the provincial Government, to the exclusion of the national or municipal Government ." In short, the BIR, being an agency of the national government, has no mandate and jurisdiction to levy gross receipts tax on admission receipts derived by places of amusement. (See also Revenue Memorandum Circular No. 8-88, issued on February 19, 1988) Accordingly, the said admission receipts are not subject to the 10% value-added tax or to the amusement tax prescribed under Section 102 or 123 of the National Internal Revenue Code, as amended, respectively. However, your other revenue or receipts from the conduct of live concerts, other than admission receipts (e.g., payments received from sponsors of the concert whose products are advertised in the course of such concert), being in the nature of revenue or receipts from advertising services rendered, shall be subject to the 10% VAT, pursuant to Section 102, NIRC, since this type of revenue is not embraced by the aforesaid exclusive jurisdiction of the Provincial Government. Payments received from your sponsors vis-a-vis your televised concerts in the course of which your sponsors' products are advertised are in the nature of payments received for advertising services rendered. This is not, likewise, embraced by the exclusive jurisdiction of the Provincial Governments, hence, subject to the 10% VAT, pursuant to Section 102, NIRC. Accordingly, VAT Ruling No. 092-90, so far as inconsistent herewith, is hereby amended. Your gross receipts from management of local talents involves sales of services, hence, also subject to the 10% VAT under Section 102, NIRC. (See also VAT Ruling No. 092-90). Very truly yours, JOSE U. ONG Commissioner of Internal Revenue