Congress nixes minimum base for 3% common carriers tax

Congress has removed the minimum base for the three-percent common carriers tax collected from buses, jeepneys and other land-based transport carriers, requiring operators to instead submit their actual gross income on a quarterly basis.

The proposed law was approved earlier this week and the Department of Finance (DOF) said this would increase the collection of the Bureau of Internal Revenue (BIR).

Finance Assistant Secretary Gil Beltran told reporters that the minimum base for the common carriers tax was pegged by the original law at specific amounts but the base has not been adjusted since the 1970s.

Under the old law, the jeepney operators are required to pay a three-percent percentage tax based on a minimum of P2,400 per quarter in Metro Manila and P1,200 for provincial areas.

Public utility buses, on the other hand, are required to pay the tax based on the minimum gross receipts of P7,200 for buses exceeding 50 passengers, P6,000 for buses with seating capacity of 30 to 50 passengers and P3,600 for buses with a total capacity of less than 30 passengers.

According to Beltran, the minimum gross receipts was removed and instead bus, jeepney and taxi operators would be required to present their actual gross receipts on a quarterly basis.

"The three-percent tax will then be based on the total quarterly gross receipts," Beltran said.

According to the DOF, it has been lobbying for either the adjustment of the minimum or its removal altogether because the BIR ended up using this minimum as the default base.

At the time when the minimum quarterly receipts was at P2,400 for jeepneys, the minimum fare was 20 to 25 centavos. At the current minimum fare of P5.50, the DOF said there was no way that the actual quarterly receipts per jeepney would be even close to only P2,400.

According to DOF sources, however, it had no estimate of how much incremental revenue the BIR would end up collecting since the DOF was not expecting the base to be removed altogether.

The DOF’s original proposal was to either adjust the minimum to current prices or to increase the rate to five percent.

Land-based transport is covered by the common carriers tax because it was considered administratively difficult to cover them with the value added tax (VAT).

Air and water-based transports were originally covered by the common carriers tax but they have since been covered by the VAT law when it was amended last month.