Question & AnswerQ&A (REVENUE MEMORANDUM CIRCULAR NO. 70-2015)
A Transport Network Company (TNC) is a pool of land transportation vehicles whose accessibility to the riding public is facilitated through the use of a common point of contact, such as text, telephone or mobile applications, and payments may be made via various modes including cash and electronic payments.
A TNC that holds a valid and current CPC is classified as a common carrier and is subject to the Three Percent (3%) common carriers tax under Section 117 of the National Internal Revenue Code (NIRC). It issues non-VAT official receipts to passengers/customers.
If the TNC is not a holder of a valid and current CPC, it is classified as a land transportation service contractor and is subject to the Twelve Percent (12%) Value Added Tax (VAT) under the NIRC. It must issue VAT official receipts to passengers/customers.
A common carrier must hold a valid and current Certificate of Public Convenience (CPC) issued by the LTFRB, and is subject to a 3% tax. A land transportation service contractor does not hold a CPC and is subject to 12% VAT or 3% percentage tax, depending on registration and income thresholds.
No, an Accreditation issued by the LTFRB is not equivalent to a CPC and does not make the holder a common carrier for tax purposes.
TNCs and their partners must register their business at the Revenue District Office (RDO) using BIR Form 1901 (individuals) or 1903 (corporations/partnerships), pay the registration fee, and obtain a BIR Certificate of Registration reflecting the applicable tax types.
They must secure Authority to Print (ATP) for official receipts, which may be manual or electronic, and issue registered official receipts for every sale or service exchanged, ensuring compliance with prescribed revenue issuance requirements.
They must withhold required creditable/expanded withholding tax, final tax, tax on compensation of employees, and other withholding taxes. Payments between TNCs and partners are subject to creditable/expanded withholding tax, which must be remitted to the BIR with certificates issued to payees.