(First of two parts)
With the economic uncertainty and the recent calamities, expect people to flock to tiangges or bazaars this holiday season to look for gifts at the cheapest prices possible. In troubled times, the Filipino would want to stretch his hard-earned peso to the limit. Bargain hunting has always been one of the Filipino’s past times and where else can you haggle 50 percent or maybe more off the original price but in the tiangges. There is always a certain sense of pleasure when you walk out of a store getting your desired items at the price you bargained for.
As the tiangges become a familiar sight not only during the Christmas season but also for the most part of the year, the BIR has stepped in to tax the income of tiangges. Recently, the Bureau of Internal Revenue (BIR) created a stir with the issuance of Revenue Memorandum Order 034-09 last Nov. 11, 2009 dubbed “SanTAX Claus” Project to monitor the compliance of tiangges with the regulations.
Under the SanTax Claus Project, the BIR deployed several of its revenue officers wearing Santa Claus outfits to different establishments to check on stores’ compliance with BIR requirements. Their primary functions include handing out of flyers to participating vendors, posting tarpaulins on the need of buyers to request receipts and observing whether vendors are properly issuing receipts or invoices. In the event that the organizers and vendors are found to have committed any violations, the different BIR teams will hand out applications for registration forms with pre-generated taxpayers identification number (TIN) to assist the businesses in registering with BIR. They are also asked to pay the annual registration fee and submit the application form on-the-spot. If the taxpayer is found to be without BIR-registered invoices/receipts, the SanTax Claus shall issue BIR Printed Receipts/Invoices (BPRs). On-the-spot registration of a taxpayer under the SanTax Claus program and the issuance of the BPR do not relieve the taxpayer from liabilities and penalties.
Under this scenario, this was the one time that Santa Claus was not welcomed with open arms. Several vendors protested and complained of the program insisting that this will cause an increase in their prices at a time when Christmas bazaars were the only venue for them to make a little money and for shoppers to find bargains. The BIR commented that the Santa Claus Project is not an enforcement activity of the BIR, but rather it was a way to promote voluntary compliance for taxpayers that will result in the generation of taxes. Unbeknown to most tiangge operators, the taxation of tiangges is not new. In 2003, the growing popularity of using the tiangges to sell goods and services prompted the BIR to look into this otherwise untapped revenue source through the advance payment of percentage taxes under Revenue Regulations (RR) No. 16-2003 as amended by RR No. 24-2003.
Under the regulation, the “tiangge” or privilege store refers to a stall or outlet which is not registered with the BIR, not permanently fixed to the ground and is normally set up in places like the shopping malls, hospitals, office buildings, hotels, villages or subdivisions, churches, park, streets and other public places, for the purpose of selling a variety of goods/services for short durations of time. Provided, however, that should the duration exceed six (6) months in any taxable year, then, it shall not be considered a privilege store under the Regulations.
The “Exhibitor” or “Organizer” refers to the primary lessee of the entire space where the operations of privilege stores are held by virtue of a lease contract executed between the owner of the leased property and the organizer who subsequently sub-leases the same to the privilege store operators during the entire duration of the lease contract. In case the owner of the real property is the one directly leasing to the privilege store operator, such owner shall be constituted as the exhibitor or organizer for this purpose.
(Deanna Yvonne Geraldine A. Florendo is an Assistant Manager for Tax and Corporate Services of Manabat Sanagustin & Co., CPAs, a member firm of KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.
The views and opinions expressed herein are those of the authors and do not necessarily represent the views and opinions of KPMG in the Philippines. For comments or inquiries, please email dflorendo@kpmg.com.ph)