UBER Systems Inc. has paid P41.15 million in deficiency value-added tax to the Bureau of Internal Revenue to avoid the suspension or closure of its business operations here, officials said Thursday.
The payment was the culmination of the audit of UBER’s VAT compliance for the period July 1 to Dec. 31, 2016, conducted by revenue officers in Makati City.
UBER is registered with the Land Transportation Franchising and Regulatory Board as a Transportation Network Company with a pool of Transportation Network Vehicle Service operators and drivers who use its transport system to transport passengers from one place to another.
The company provides prearranged transportation services for a fee using an internet-based application or digital platform to connect passengers with the drivers using personal vehicles.
All of UBER’s earnings are derived from the transportation services made by its TNVS operators and drivers within the Philippines. Hence, its gross receipts from such services is subject to the 12-percent VAT and not to the 3-percent common carrier’s tax.
Although UBER has religiously filed its VAT returns on time, it declared its sale of services rendered within the Philippines amounting to P413.85 million as zero-rated sales, contrary to the “cross border doctrine.”
The doctrine basically means that no VAT will be imposed to form part of the cost of goods destined for consumption outside of the territorial border of the taxing authority. Conversely, those destined for use or consumption within the Philippines will be imposed with the 12-percent VAT.
Officials said the act of UBER of declaring its sale of services as zero-rated and not paying the VAT due thereon is a clear violation of the Tax Code which is one of the grounds for its suspension or temporary closure.
Revenue District Officer Florante Aninag recommended the suspension of UBER after it failed to pay its VAT liabilities despite the service of the required notices.