BIR clarifies tax treatment for Uber, Grab taxi

MANILA, Philippines - The Bureau of Internal Revenue has clarified the tax treatment for transport network companies such as Uber and GrabTaxi.

In BIR Revenue Memorandum Circular No. 70-2015, commissioner Kim Henares said if the firm or its partners have been granted a Certificate of Public Convenience, its gross receipts would be subject to a three percent common carriers tax. 

Otherwise, the transport company or its partners would be classified as a land transportation service contractor and would be slapped a 12 percent value added tax.

Henares said transport network companies refer to those pooling vehicles for the public with its use made through a point of contract which could be in the form of a text, a phone call, an e-mail, a mobile application, or other means.

Payments for services to these companies are done through cash, debit card, credit card, mobile payment or by other ways.

Vehicles used by these firms, Henares said, may be owned by the transport company itself or by other people or entities dubbed as partners in the circular. At the same time, the vehicles are also owner-driven, or driven by employees by the transport network firm or their partners.

The Department of Transportation and Communication created in May a new category for these kinds of transport companies to allow them to operate in the Philippines. Operators were also asked then to obtain a Certificate of Public Convenience, an authorization issued by the Land Transportation and Franchising Regulatory Board for public services.

Henares said in the circular the transport network companies and their partners should be registered at Revenue District Offices that have jurisdiction over their head office or place of business.

Moreover, the firms and their partners have also been required to secure official receipts and books of accounts for its operations. The BIR said they should secure an Authority to Print for electronic invoices especially issued by the likes of Uber and GrabTaxi to its passengers.

The BIR has ordered these transport companies and its partners to ensure the correct withholding tax, final tax, tax on compensation of employees, and other dues are being withheld and remitted to the agency within the prescribed periods.

The tax bureau also reminded the firms they should file the applicable tax returns, pay the correct internal revenue taxes, and submit compliance reports such as the Summary List of Sales or Purchases if applicable.

“The existing tax laws and revenue issuances on the tax treatment of purchases and sale of goods or services shall be equally applied with no distinction on whether or not the marketing change is the Internet or digital media or the typical and customary physical medium,” Henares said.

She added the non-registration of businesses with the BIR, non-issuance of official receipts, and non-withholding of taxes, among others, would be subject to both civil and criminal liabilities under the National Internal Revenue Code of the Philippines.