RMC No. 70-2015: Reiterates the tax treatment of certain persons engaged in the business of land transportation

Key points

1. TNC treatment. A TNC holding a valid and current Certificate of Public Convenience (CPC) is a common carrier, with gross receipts subject to 3% Common Carriers Tax under Section 117 of the NIRC. A TNC without a CPC is a land transportation service contractor subject to 12% VAT.
2. Partner treatment. A Partner with a CPC is a common carrier subject to the 3% tax. A Partner without a CPC is a land transportation service contractor, and mere LTFRB accreditation is not equivalent to a CPC.
3. VAT or Percentage Tax option. A transportation service contractor with gross annual sales and/or gross receipts not exceeding P1,919,500.00 may register as a VAT taxpayer liable to 12% VAT, or as a non-VAT taxpayer paying 3% Percentage Tax under Section 116. The Partners of the TNC belong to this category.
4. Obligations. Each TNC and Partner must register with the BIR, issue ORs, withhold required tax, file returns and keep books of accounts and records, as specified in RMC No. 55-2013 and other provisions. All payments from a passenger or customer must be issued an OR without a demand for it.
5. Deductions, credit card companies and liability. Payments are not deductible unless supported by a valid OR and with withholding taxes properly withheld and remitted. Credit card companies must follow existing rules, including withholding of taxes, on payments to TNCs and Partners. Non-registration, non-issuance of ORs and non-withholding carry civil and criminal liabilities under the NIRC.

Who is affected

• Transport network companies and their Partners
• Land transportation service contractors and common carriers
• Credit card companies paying TNCs and Partners