Overseas Communication Tax Under RR 11 - 2011

Revenue Regulations No. 11-2011 entitled "Revenue Regulations Defining Gross Receipts for Common Carrier's Tax for International Carriers pursuant to Section 118 of the Tax Code amending Section 10 of Revenue Regulations No. 15-2011" finally came up with a formal definition of Gross Receipts for International Carriers under Section 118 of the Tax Code as follows:

"Gross receipts" shall include, but shall not be limited to, the total amount of money or its equivalent representing the contract or ticket prize, excess baggage fees, freight/cargo fees, mail fees, rental, penalties, deposit applied as payments, advance payments and other service charges and fees actually or constructively received during the taxable quarter from the passage of persons, excess baggage, cargo and/or mail, originating from the Philippines in a continuous and uninterrupted flight, irrespective of the place of sale or issue and the place of payment of the passage documents.

Provided, that ticket revalidated, exchanged and/or endorsed to another international airline shall likewise form part of the gross receipts if the passenger boards a plane in a port or point in the Philippines.

Provided, further, that for a flight which originates from the Philippines, but where transshipment of passenger takes place at any port outside the Philippines on another airline, only the aliquot portion of the cost of the ticket corresponding to the leg flown from the Philippines to the point of transshipment shall form part of the Gross Receipts.

Said definition amended Section 10 of Revenue Regulations No. 15-2002. Notably, Section 118 of the Tax Code simply provides as follows:

SEC. 118 Percentage Tax on International Carriers. -

(A) International air carriers doing business in the Philippines shall pay a tax of three percent (3%) of their quarterly gross receipts.

(B) International shipping carriers doing business in the Philippines shall pay a tax equivalent to three percent (3%) of their quarterly gross receipts.

Thus, the above definition under Revenue Regulations No. 11-2011 amending Section 10 of Revenue Regulations No. 15-2002 would serve as a guide for international carriers in determining their gross receipts for percentage tax purposes.

This may not have much impact for passengers of international flights because percentage tax imposed by the Bureau of Internal Revenue (BIR) is a direct tax where the airline company is the one directly liable. It is not like with the Value Added Tax (VAT) that could be passed on to the buyer.

Resources:

Revenue Regulations No. 11-2011
Revenue Regulations No. 15-2001



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Posted in: common carrier's tax,international carriers,Other percentage taxes