Grab Operator Driver Tax Accounting (TNC) Part 2
Transportation Network Companies (TNCs), just like any other businesses are subject to tax. In fact, when it comes to tax obligations, unless specifically exempted by the National Internal Revenue Code or a special law, all businesses, whether online or offline, are subject to tax. But which tax? Everything applicable.
For an ordinary citizen, when considering an opportunity to earn, tax is often not considered. That is why when Uber, Grab Car and other TNCs made noise, many individuals and businesses purchased cars and tried their luck with this venture, without taking a look at the tax side of it. They’re looking at a sure profit. But in a country where the running of a government is highly dependent on collections of internal revenue taxes to sustain its operation, “what’s new” in the market always have a corresponding “what’s existing” in taxation. Thus, the Bureau of Internal Revenue (BIR) reiterates the existing NIRC provisions for this new business model.
BIR Compliance Requirements
The BIR issued RMC No. 70-2015 Reiterating the Tax Treatment of Certain Persons Engaged in the Business of Land Transportation to clarify taxation related to those operating under the TNC model. This issuance just clarifies the existing provisions of the NIRC that, similar with all other businesses, TNCs and their Partners are subject to different kinds of taxes . 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.
Bureau of Internal Revenue (BIR) chief Kim Henares has her sights on Uber, Grab and other app-based transport network companies (TNCs).
According to the BIR commissioner, their agency is closely coordinating with the Land Transportation Franchising and Regulatory Board (LTFRB) to track tax payments of these TNCs and their partner operators and drivers.
In recent days, Grab and Uber were given accreditation by the LTFRB. Grab was the first one to secure their accreditation while Uber just secured theirs recently, beating the deadline set by LTFRB.
Henares said the BIR may soon release a new regulation if the need arise which will cover vehicle drivers of Uber, Grab and other TNCs. She also mentioned that UBER, Grab, other TNCs, and their partners are all businesses which have taxes due that must be settled according to law. Yes, we as partners are now a business entity, specifically a sole proprietorship. Remember we registered for a business name with DTI? and signed the Motion for Provisional Authority Terms and Conditions?