Good news! Amusement tax now at 10% max
Good news to the amusement industry! R.A. 9640, amending Section 140 of Republic Act No. 7160 – The Local Government Code of 1991, lapsed into law on May 21, 2009 without the signature of the President provides a big drop of amusement tax rate from 30% maximum to now 10% maximum. This kind of tax is a local tax that is imposed by the respective local government units (LGU) and covers the proprietors, lessees, or operators of the following:
- theaters;
- Cinemas;
- concert halls;
- circuses;
- boxing stadia; and
- other places of amusement.
This will help the industry in this trying times and will hopefully reduce our fees for amusement places. Hereunder is the excerpt of the law for easy reference:
SECTION 1. Section 140 of Republic ct No. 7160, otherwise known as “The Local Government Code of 1991”, is hereby amended to read as follows
SEC. 140. Amusement Tax.
(a) The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement at a rate of not more than ten percent (10%) of the gross receipts from admission fees.
(b) In the case if theaters or cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or operators and paid to the provincial treasurer before the gross receipts are divided between said proprietors, lessees, or operators and the distributors of the
cinematographic films.
(c) The holding of operas, concerts, dramas, recitals, painting and art exhibitions, flower shows, musical programs, literary and oratorical presentation, except pop, rock, or similar concerts shall be exempt from the payment of the tax herein imposed.
(d) The sangguniang panlalawigan may prescribe the time, manner, terms and conditions
for the payment of tax. In case of fraud or failure to pay the tax, the sangguniang panlalawigan may impose such surcharges, interests and penalties as it may deem appropriate.
(e) The proceeds from the amusement tax shall be shared equally by the province and he
municipality where such amusement places are located.”
SEC. 2. Repealing Clause.—All laws, executive orders, presidential decrees, ordinances, rules and regulations or parts thereof which are inconsistent with any of the provisions of this Act are hereby repealed or modified accordingly.
SEC. 3. Effectivity Clause.—This Act shall take effect fifteen (15) days after its complete publication in the Official gazette or in at least two (2) national newspapers of general circulation.”
“Taxes affect lives, care for taxes and save lives”
Tags: amusement places, boxing stadia, cinemas, concert halls
Hi,
Are cockpits arena covered by this changes?
gud day.. would appreciate to receive comments on this one:
our local bir recently sent notices to business establishments illustrating a mathematical calculation of the estimated minimum percentage tax due from non-vat taxpayers, to wit:
minimum daily income to cover basic needs 233.00 (based on regional daily minimum wage rate)
gross margin to gross sales 15%
average daily sales 1,553.00
average monthly sales 46,590.00 (30 days)
percentage tax rate 3%
minimum monthly percentage tax due 1,397.70
is the foregoing calculation accurate? is it correct or even legal to determine sales on the wage rate? are small businessess earning less than 50k a month still be subject to percentage tax?
hope you can enlighten us on this one.. thanks
@jhay.Nope, cockpits are under NIRC amusement taxes and the present amendment is on LGU taxes. thanks for the comment, jhay.
thanks jojopaler for the comment. if i am not mistaken, the issue had been in one of the forums i had joined. i just could not remember which forum. My thoughts on the issue: Before, under RR 7-95 – old VAT regulations, establishments with gross sales not exceeding P100k in 12-month period is exempted from OPT. I am not seeing the same however on RR No. 16-05, the new VAT regulations. The letter is only an estimate maybe because the BIR anticipates that no OR or invoice is being issued on sales. Under the rules, OR or invoices are required to be issued (mandatory at P25 selling price, if i remember it right) and this will be the basis of OPT computation. I had not encountered yet any regulation similar to that one, except on domestic carriers prescribing mandatory minimum tax base.
if you can have other documents to illustrate that BIR computation is far from reality, then, it maybe worth to formally contest the BIR. At 15% gross margin to sales, P10 bought will be sold at P11.5 with mark-up of P1.5. I don’t think its reasonable but I guess it was made on the average. The logic of the BIR is maybe that if you can survive in that small business, then, you must be earning at least equivalent to the minimum wage of the locality. On that aspect, it maybe reasonable, but again, if you can provide them documents to establish that it does not apply to you, then, it maybe good.
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