BIR tightens tax rules for tiangge operators

THE TAX bureau has scrapped the advanced income tax and value-added tax (VAT) or percentage tax payment scheme for "privilege store" or "tiangge" operators, instead tightening rules on the taxation of their transactions.

The Bureau of Internal Revenue’s (BIR) Revenue Regulations (RR) 16-2013, dated Aug. 22 but published in a newspaper just last Friday, imposes new rules governing the taxation of persons who sell goods and/or services through the use of privilege stores.

The new rules take effect on Oct. 12 or 15 days after their publication.

The issuance revokes RR 16-2003 and RR 24-2003, issued on April 29, 2003 and August 29, 2003, respectively.

Both 2003 issuances imposed on tiangge operators a fixed amount of VAT or percentage tax ranging from P50-P150 per day and income tax of P50 per day.

These fixed amounts were required monthly and in advance by store operators through the BIR’s authorized agent banks during the entire duration of the stores’ business operations, and were credited against the actual business tax and income tax due from the operators for the period for which the payments were remitted to the BIR.

Under RR 16-2013, the BIR has limited the term "privilege store" to refer to just stalls or outlets engaged in business for short durations of time, for a cumulative period not exceeding 15 days.

Those operating these stalls regularly or beyond the 15-day limit will be considered as regular taxpayers and, as such, must be registered as persons engaged in trade or business with the BIR.

All persons involved in such tiangge events are required to submit to the organizers an information statement on their activities indicating the inclusive dates of business operations and their taxpayer identification numbers (TIN), among others.

Stall owners are also required to deduct, withhold, and remit to the BIR the expanded withholding tax due on rental payments they will make to the event’s organizers.

Under the new rules, privilege store operators are required only to file income tax returns covering the year the income from the event was earned.

They must also keep books of accounts and issue receipts or sales invoices as provided by the exhibitors, and submit a list of sales during their operation of their stalls within five days after the event.

Because they are not registered as business taxpayers, organizers of events are required to provide these privilege store operators with central cash register or point of sale machines, or manual official receipts or invoices for their use.

Meanwhile, for tenants in such events not qualified as privilege store operators, they are required to file income, withholding, VAT or percentage, and other tax returns as scheduled for regular business taxpayers.

They are likewise obliged to keep books of accounts and issue their own receipts or invoices at these events, and file other information returns required by law.

For their part, event organizers must report to the Revenue District Offices (RDO) having jurisdiction over their events pertinent information on the establishments involved. They are also obliged to ensure that tenants in their events are properly registered with the BIR.

If the property used to host the event is not their own, these organizers must likewise deduct, withhold, and remit to the BIR the expanded withholding tax due on rental payments they will pay to the lessor of the property concerned. -- B.F.V. Roc

source:  Businessworld