Transport network companies (TNCs) such as Uber and GrabTaxi must pay either common carriers or value-added tax, issue receipts and ensure that all tax returns are filed in the Bureau of Internal Revenue.
Revenue Commissioner Kim S. Jacinto-Henares made this clear in Revenue Memorandum Circular No. 70-2015 issued by the country’s biggest tax-collection agency on Oct. 29, 2015 to lay down the rules on the tax treatment of TNCs.
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. “The TNC shall register and obtain an ATP under the e-Invoicing System for the official receipts (ORs) issued to passengers. Its partners shall likewise follow insofar as the ORs they will issue to the TNC for the use or rental of the vehicle, if such is the case.”
The BIR reiterated that TNCs as well as partners must issue either manual or electronic ORs in at least in duplicate for every service, with the original receipt to be handed to the passenger.