Law Summary
Characteristics of Night Clubs, Day Clubs, and Cabarets
- Night and day clubs are drinking, dancing, and entertainment venues.
- Often serve food alongside entertainment.
- Cabarets are restaurants or clubs with liquor, food, and a stage.
- Stages accommodate musicians, dancers, comedians.
- Patrons engage in dancing similar to nightclubs.
Expansion of Covered Establishments to Modern Interactive Entertainment
- Emergence of modern entertainment such as recorded music and microphoned performances.
- Lounges and clubs provide facilities for patron participation (e.g., singing).
- Revenue primarily from food and drink sales.
Inclusion of Videoke and Karaoke Bars under Amusement Tax
- Night clubs, day clubs and cabarets now also cover videoke bars, karaoke bars, karaoke television, karaoke boxes, and music lounges.
- These venues offer pleasurable diversion and entertainment analogous to traditional amusement places.
Tax Implications and Clarifications
- Proprietors, lessees, or operators of these establishments are subject to the 18% amusement tax under Section 125(b) of the Tax Code of 1997, as amended.
- They are not subject to the 12% Value Added Tax (VAT) on gross receipts for these activities.
Guidance and Implementation
- All concerned parties are advised to adhere to this circular for proper tax compliance.
- The circular mandates widespread dissemination to ensure awareness and adherence.
Official Adoption
- Circular officially adopted on 01 March 2010 by the Commissioner of Internal Revenue Joel L. Tan-Torres.