Tax notes: VAT on hotel services to int’l airline firms-A A +A
Monday, May 31, 2010
THE Bureau of Internal Revenue (BIR) recently ruled that the room accommodation and food and beverage services rendered by a hotel for clients engaged in international transport operations are subject to value-added tax (VAT) at 12 percent, not at zero percent. [BIR Ruling DA(VAT-003) 016-2010 dated Jan. 28, 2010]
In the ruling, the BIR upheld its position under VAT Ruling 021-2001 dated May 15, 2001 that the VAT zero-rated services contemplated in the VAT Law refer to services rendered directly in relation to the international vessel itself.
Since the hotel services are rendered within the hotel’s premises and have no direct connection with the transport of goods or passengers, the BIR held that the services cannot be deemed as services directly attributable to the transport of goods and passengers from a Philippine port directly to a foreign port entitled to VAT zero-rating under Section 108(B)(4) of the Tax Code of 1997. (Source: Punongbayan & Araullo)