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Tuesday, September 19, 2006
Tax notes: Amusement tax part of VAT for cinemas
The basis of the value-added tax (VAT) transactions by cinema operators is the total gross receipts undiminished by any local taxes imposed by the local governments on receipts generated from admission tickets.
The basis for the imposition of VAT shall be gross receipts, defined as “the total amount of money or its equivalent representing the contract price, compensation, service fee, rental or royalty, including the amount charged for materials supplied with the services and deposits and advance payments actually or constructively received…” (Bureau of Internal Revenue Ruling DA-260-2006 dated April 12, 2006)
Cinema operators cannot be exempt from VAT because the amusement tax they pay is imposed by local government units and is not in the same nature as percentage taxes imposed under the Tax Code. (Source: Punongbayan & Araullo)
For Bisaya stories from Cebu. Click here. (September 19, 2006 issue)
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