Amusement Tax.docx

Date: 21 March 2019 Subject: Amusement Tax I. Legal Basis; Amusement Tax levied by the City of Manila Local Government Code1 Section 140. Amusement Tax. (a) The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement at a rate of not more than thirty percent (30%) of the gross receipts from admission fees. (b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or operators and paid to the provincial treasurer before the gross receipts are divided between said proprietors, lessees, or operators and the distributors of the cinematographic films. (c) The holding of operas, concerts, dramas, recitals, painting and art exhibitions, flower shows, musical programs, literary and oratorical presentations, except pop, rock, or similar concerts shall be exempt from the payment of the tax hereon imposed. (d) The sangguniang panlalawigan may prescribe the time, manner, terms and conditions for the payment of tax. In case of fraud or failure to pay the tax, the sangguniang panlalawigan may impose such surcharges, interest and penalties as it may deem appropriate. (e) The proceeds from the amusement tax shall be shared equally by the province and the municipality where such amusement places are located. Section 151. Scope of Taxing Powers. - Except as otherwise provided in this Code, the city, may levy the taxes, fees, and charges which the province or municipality may impose: Provided, however, That the taxes, fees and charges levied and collected by highly urbanized and independent component cities shall accrue to them and distributed in accordance with the provisions of this Code.

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Republic Act 7610

The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes. Manila Ordinance No. 79882 SECTION 12.

Amusement Tax. —

a) The city hereby imposes an amusement tax to be collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls, music lounges, sing-along, restaurants, circuses, boxing stadia, basque pelota ("jai-alai") courts, race tracks and other places of amusement at the rate of thirty percent (30%) of the gross receipts from admission fees. b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or operators and paid to the City Treasurer before the gross receipts are divided between said proprietors, lessees or operators and the distributors of the cinematographic films. c) The holding of operas, concerts, dramas, recitals, painting and art exhibition, flower shows, musical programs, literary and oratorical presentations, except pop, rock, or similar concerts shall be exempt from the payment of the tax herein imposed. d) Payment of Tax — The tax shall be due and payable within the first twenty (20) days of the month next following that for which it is due by the proprietor or lessee or operator concerned. The tax shall be determined on the basis of a true and complete return of the amount of gross receipts derived from the preceding month. e) Penalties — if the tax is not paid within the time fixed, the taxpayer shall be subjected to the surcharges, interest, and AN ORDINANCE AMENDING CERTAIN SECTIONS OF ORDINANCE NO. 7794, TAX ORDINANCE NO. 93-001 OTHERWISE KNOWN AS THE AMENDED REVENUE CODE OF THE CITY OF MANILA 2

Commented [AB1]: Sir, this has been further amended by Manila Ordinance 8331. However, it is not available online. The Office of the City Administrator told me that we can get a copy from their office. We get a copy upon your advise. But based on the official website of the City of Manila, Ordinance 8331 or the 2013 Omnibus Revenue Code of the City rationalizes the local tax rates since the previous administration did not revise property values since 1996 and did not increase local taxes since 1993 (http://manila.gov.ph/state-of-the-city-address-2). If Manila Ordinance 8331 merely increased the rates of local taxes, then the amusement tax would still be 30% of the gross receipts since the LGC limits the amusement tax at a rate of not more than 30%.

penalties prescribed by this Ordinance. In case of willful neglect to file return and pay the tax within the time required, or in case of fraudulent return is filed or a false return is willfully made, the taxpayers shall be subject to a charge of fifty percent (50%) of the correct amount of the tax due, in addition to the interest as penalties provide by the ordinance. Manila Ordinance 78293 SECTION 1. This Ordinance shall govern the collection of amusement tax on admission from the proprietors, lessees or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement at the rate authorized by law on the gross receipts from admission fees. SECTION 2. To ensure systematic and efficient collection of amusement tax, the following procedures are hereby prescribed: I.

On Cinemahouses xxxx

II.

Other Amusement Taxes a) The amusement or benefit shows shall be initiated through a letter request addressed to the City Mayor and referred to the City Treasurer for comment and recommendation. b)

If permit is granted by the City Mayor, the following shall be required: 1.

The Mayor's Permit Fee and other regulatory fees shall first be paid to the City Treasurer.

2.

The tickets, before the same are sold to the public, shall be presented to the License Division, Office of the City Treasurer, for registration and stamping.

AN ORDINANCE OUTLINING THE SYSTEMATIC PROCEDURE FOR THE COLLECTION OF AMUSEMENT TAX ON ADMISSION, AND PROVIDING PENALTIES FOR VIOLATION THEREOF

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3.

If subject to the amusement tax on admission, a report of all tickets sold, duly certified as true and complete return, not later than three (3) days after the termination of such benefit show together with the corresponding remittance of amusement tax due the City shall be submitted by the sponsor of the benefit show. cda

4.

The holding of operas, concerts, dramas, recitals, painting and exhibitions, flower shows, musical program, literary and oratorical presentations, except pop, rock or similar concerts shall be exempt from the payment of the amusement tax. No other exemptions shall be allowed except those that are authorized under Republic Act 7160 or the Local Government Code.

II. NIRC General Rule: Non-stock non-profit organizations are exempt from corporate income tax4. Exception: Last paragraph of Section 30 of the NIRC qualifies the words 'organized and operated exclusively' by providing that: Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and character of the foregoing organizations from any of their properties, real or personal, or from any of their activities conducted for profit regardless of the disposition made of such income, shall be subject to tax imposed under this Code5. In CIR v. St. Lukes Medical Center, the Supreme Court further provides that: To be exempt from income taxes, Section 30(E) of the NIRC requires that a charitable institution must be 'organized and operated exclusively' for charitable purposes. Likewise, to be exempt from income taxes, Section 30(G) of the NIRC requires that the institution be 'operated exclusively' for social welfare.

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Section 30, NIRC. CIR v. St. Lukes Medical Center, February 13, 2017,G.R. No. 203514

However, the last paragraph of Section 30 of the NIRC qualifies the words 'organized and operated exclusively' by providing that: Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and character of the foregoing organizations from any of their properties, real or personal, or from any of their activities conducted for profit regardless of the disposition made of such income, shall be subject to tax imposed under this Code. In short, the last paragraph of Section 30 provides that if a tax exempt charitable institution conducts 'any' activity for profit, such activity is not tax exempt even as its not-for-profit activities remain tax exempt. This paragraph qualifies the requirements in Section 30(E) that the '[n]on-stock corporation or association [must be] organized and operated exclusively for . . . charitable . . . purposes . . . . ' It likewise qualifies the requirement in Section 30(G) that the civic organization must be 'operated exclusively' for the promotion of social welfare. Thus, even if the charitable institution must be 'organized and operated exclusively' for charitable purposes, it is nevertheless allowed to engage in 'activities conducted for profit' without losing its tax exempt status for its not-forprofit activities. The only consequence is that the 'income of whatever kind and character' of a charitable institution 'from any of its activities conducted for profit, regardless of the disposition made of such income, shall be subject to tax.'