Tuesday, August 19, 2008 Tax notes: Taxation of air carriers and their sales agents
REVENUE Memorandum Circular (RMC) 46-2008 clarifies the issues pertaining to the value-added tax (VAT) liability of domestic and international air carriers and their agents and suppliers of goods and services.
The said circular provides, among other things, that VAT-registered domestic air carriers are required to issue VAT official receipts on their sale of passenger or cargo tickets for both domestic and international flights. The passenger or cargo tickets cannot take the place of VAT official receipts.
Agents of domestic carriers (general sales agents or travel agents) should issue the VAT official receipts of the domestic air carriers and not their own official receipts. The agents should bill the domestic air carriers for their commissions including the 12-percent VAT, if the agents are VAT-registered, and issue VAT official receipts that will serve as basis of the domestic air carrier in claiming input taxes on commissions paid to agents. If the agent is a qualified non-VAT taxpayer, a non-VAT official receipt should be issued, instead.
On the other hand, agents and other intermediaries purchasing passenger spaces or cargo spaces in bulk and reselling the same to the customer at their own price shall be treated as distributors/retailers, and should be taxed accordingly. They should issue their own official receipts and sales invoice/billing statements.
In cases where domestic air tickets are sold through electronic ticketing where no paper value documents are issued, the same would still require the issuance of an official receipt. The domestic air carrier should provide for a facility to allow the buyer to download the information contained in the airline ticket electronically stored in its computer system and to generate/print an official receipt. This particular situation assumes that the air carrier has a BIR-approved computerized accounting system or components, which includes the system that allows the issuance of computer-generated VAT official receipt.
In the absence of such facility, a manual VAT official receipt that complies with the Bureau of Internal Revenue (BIR) requirements should be issued by the domestic air carrier, which will be the basis of the VAT-registered buyer in claiming input tax on the purchase of carriage service. (Source: Punongbayan & Araullo)
