BIR clarifies rules on tax treatment of transport network companies
Ride-sharing services provider Uber is about to launch in Cebu.
The company has been flooding social media with promotional tweets and posts inviting professional drivers and private car owners in Cebu to sign up as partner-drivers and partner-operators, respectively.
On its website, Uber announced that those who sign up and submit all the required documents by Nov. 6 will be given a P3,000 bonus upon the first trip.
Among the requirements are proof of ownership of the vehicle, proof of insurance, photos of the vehicle and the owner’s bank account details.
Qualified vehicles are a four-door compact sedan, Asian utility vehicle, sport utility vehicle and full-size sedan that is a 2012 model or newer.
Uber, which was developed by Uber Technologies, Inc. and launched in 2009, connects commuters and drivers through its mobile application.
Commuters request for a ride through the app, which contacts the nearest available driver. The fare is automatically charged to the commuter’s credit card on file.
TAX RULES
As this developed, the Bureau of Internal Revenue (BIR) clarified that transport network companies Uber and GrabTaxi must pay either common carriers or value-added tax, issue receipts and ensure that all tax returns are filed.
A transport network company is the web-based platform that provides ride-sharing services.
Revenue Commissioner Kim S. Jacinto-Henares clarified the rules on the tax treatment of transport network companies in Revenue Memorandum Circular No. 70-2015, which was issued last week.
Under these rules, the BIR said TNCs holding current and valid franchise or certificates of public convenience (CPC) must have their gross receipts subjected to 3-percent common carriers tax, as mandated under Section 117 of the Tax Code or National Internal Revenue Code of 1997, as amended.
For those without CPCs, they will be classified as land transportation contractors, hence subject to 12-percent VAT, the BIR said, noting that “an accreditation [to TNCs] issued by the LTFRB (Land Transportation Franchising and Regulatory Board) is not in itself a CPC and will not make said operation that of a common carrier.”
“If the [TNC] partner is not a holder of a CPC, said partner is merely a land transportation service contractor and under the VAT system, the transportation service contractor, at its option if the gross annual sales and/or gross receipts do not exceed P1,919,500, may register either as a VAT taxpayer and be liable to the 12-percent VAT, or as non-VAT taxpayer, for it is mandated to pay the 3-percent percentage tax under Section 116 of the Tax Code. The partners of the TNC belong to this category,” the BIR pointed out.
The BIR defined “partners” as the vehicles used in transporting passengers and/or goods within the TNC, which may be owned by other people and/or other entities other than the TNC.
All TNCs and their partners must also register their businesses at their respective revenue district offices and secure a BIR Certificate of Registration, which should be displayed in the vehicles.
TNCs and their partners must also secure an authority to print (ATP) official receipts and register books of accounts for use in business, the BIR said.
Receipts should be issued in duplicate for every service, with the original receipt to be handed to the passenger. /MVI/INQUIRER.NET