Aside from amusement tax, read also: Tax Exemption for Nonstock Nonprofit Corporation
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Earnings derived by any person engaged in the sale of services is subject to percentage tax
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An amusement tax is a form of percentage tax
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Resorts, swimming pools, bath houses, hot springs, and tourist spots are not subject to amusement taxes
Mental health is often missing from public health debates even though it’s critical to well-being. – Diane Abbot
This Covid-19 Pandemic has affected not only the world economy but also the mental health of the public. To boost the economy, communities are gradually relaxing their quarantine rules after careful consideration.
Some communities, subject to certain conditions and requirements, have already opened their borders for tourists. Also, some establishments are now open but still subject to the necessary guidelines. On the part of the government, this is for economy boosting. On the part of the tourists or customers, the opening of the borders or establishments is good for their well-being as they may travel, or engage the services of an establishment as their way of coping with stress and/or protecting their mental health. More often that not, tourists have to stay in places like resorts.
The question is, “Are admission fees for resorts subject to amusement tax?”
For a better understanding, let us take the case of Pelizloy Realty Corporation vs. The Province of Benguet, G.R. No. 183137, April 10, 2013.
In this case, Pelizloy Realty Corporation (“Pelizloy”) owns Palm Grove Resort, which is designed for recreation and which has facilities like swimming pools, a spa and function halls. It is located at Asin, Nangalisan, Municipality of Tuba, Province of Benguet.
Pelizloy questioned the imposition by the Province of Benguet (“Province”) of 10% on the gross receipts from admission fees for boxing, resorts, swimming pools, bath houses, hot springs, and tourist spots. The Province argued that resorts, swimming pools, bath house, hot springs, and tourists’ spots are encompassed in the term “amusement” under the Local Government Code of 1991 (LGC).
Is the Province correct?
The law says:
No.
The LGC defines “amusement” as “pleasurable diversion and entertainment. It is synonymous to relaxation, avocation, past time, or fun. The LGC also states that it 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.
However, resorts, swimming pools, bath houses, hot springs, and tourist spots are NOT among the amusement places expressly mentioned in the LGC as subject to amusement taxes. For clarity, “amusement places” include theaters, cinemas, concert halls, circuses and other places of amusement where one seeks admission to entertain oneself by seeing or viewing the show or performance.
The Supreme Court says:
It is clear that resorts, swimming pools, bath houses, hot springs, and tourist spots cannot be considered venues primarily “where one seeks admission to entertain oneself by seeing or viewing the show or performance. While it is true that they may be venues where people are visually engaged, they are not primarily venues for their proprietors or operators to actively display, stage or present shows and/or performances.
Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do NOT belong the same category or class as theaters, cinemas, concert halls, circuses, and boxing stadia. It follows that they cannot be considered as among the “other places of amusement” and which may be subject to amusement taxes as contemplated under the LGC.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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