BIR puts Uber, Grab under tax coverage

Internal Revenue Commissioner Kim S. Jacinto-Henares placed under tax coverage yesterday the app-based transportation network vehicles (TNV) Uber and Grab taxis.

In a four-page Revenue Memorandum Circular No. 70-2015, Henares said if Uber or Grab is issued certificate of public convenience (CPC) by the Land Transportation Franchising Regulatory Board (LTFRB) its gross income is subject to three percent common carrier tax as prescribed under Section 117 of the Tax

Code.

Otherwise, the business will be classified as a land transportation service contractor, subject to the 12 percent value-added tax (VAT).

The circular stressed that the accreditation issued by the LTFRB to TNCs will not be considered as CPC entitling the business to the lower three percent common carrier tax.

Like any other business, Henares said Uber and Grab operators must register their operations with the revenue district office where their residence, or business is located and secure the required authority to print (ATP) official receipts (OR).

Income payments will not be allowed as deductible expense in gross earnings unless substantiated by official receipts.

30,000 a month Henares warned that non-registration, non-withholding of taxes, and non-issuance of OR to passengers “are subject to both civil and criminal liabilities under the National Internal Revenue Code.”

She also reminded credit card companies that payments made to TNCs “should follow existing laws, rules and regulations including but not limited to the requirement of withholding taxes thereon.”

Uber and Grab drivers reportedly earn as much as 30,000 a month which is subject to income tax.

Credit card companies also earn substantial income as Uber is a cashless business and passengers pay fares on a credit card system.

Uber on its website said it is a $41billion business operating in at least 56 countries.

Revenue officials said if Uber, which is based in San Francisco, California gets $1 billion of its income here, the bureau can collect more than 1 billion in taxes yearly.

A group of jeepney drivers and operators filed recently graft charges before the Office of the Ombudsman against top officials of the LTFRB for allowing the operation of these appbased vehicles without first fixing the fare rates as required under the Public Service Act.