Annex 101 - F MCIT Gross Receipts

MEMORY
MEMORYAID
AIDIN
INTAXATION
TAXATIONLAW
LAW
SAN BEDA COLLEGE OF LAW 2003 CENTRALIZED BAR OPERATIONS

Reproduction in any form of this copy is strictly prohibited!!!
ANNEX F: GROSS RECEIPTS AND COST OF SERVICES PER INDUSTRY FOR PURPOSES OF APPLYING THE MCIT (Revenue Memorandum Circular 4-2003)
Banks and non-bank
Finance companies and other financial
financial intermediaries performing
Insurance and pension funding companies
intermediaries not performing
Brokers of securities (excluding banks)
quasi-banking activities
quasi-banking activities
Gross receipts shall mean actual or constructive
receipts from
1. interests,
2. commissions,
3. discounts from lending activities, and
4. all other items treated as gross income
under Section 32 of the NIRC of 1997 that
are not subject to final withholding income
tax

receipts representing:
1. net retained premiums (gross premiums net
of returns, cancellations, and premiums
ceded)/gross premium or collection from
planholders;
2. membership fees (in the case of HMOs);
3. miscellaneous income;
4. investment income not subject to final tax;
5. released reserve and,
6. in the case of pre-need companies, gross
withdrawals from the trust funds set up
independently as mandated by the
Securities and Exchange Commission
(SEC); and,
7. all other items treated as gross income
under Section 32 of the Tax Code.

receipts representing
1. interests,
2. discounts, and
3. all other items treated as gross income under
Section 32 of the NIRC of 1997 that are not
subject to final withholding income tax.

receipts for engaging in the business of effecting
transactions in securities for the account of others.
Cost of services shall refer to those incurred

directly and exclusively for the following activities:
a) Lending/investment of funds;
b) Obtaining of funds from the public through
the receipt of deposits; and,
c) Trading of foreign exchange and other
financial instruments.
Costs of services shall refer to those incurred

directly and exclusively in the insurance and preneed business, including the generation of
investment income not subject to final taxes,
and shall be limited to the following:
1. Salaries, wages and other employee benefits
of personnel directly engaged in said activities;
2. Commissions on direct writings/agents of preneed companies;
3. Claims, losses, maturities and benefits net of
reinsurance recoveries; and,
4. Net additions required by law to reserve fund
(for insurance companies) and in the case of
pre-need companies, contributions to the trust
funds to be set up independently as mandated
by the SEC.

directly and exclusively in their lending, financing
and generating of investment income not subject
to final taxes,
of personnel directly doing such functions;
and,
2. Interest expense.

directly and exclusively for such activity,
of personnel directly engaged in said
activities;
2. Philippine Stock Exchange (PSE) terminal
fees;
3. Communication
charges
related
to
trading/sales of securities;
4. Research fees such as access to Bloomberg
and Reuters stock data;
5. Commissions paid to its agents who are not
employees of the brokerage firm; and,
6. Settlement/processing costs of trades,
commonly known as "exchange dues."

Salaries, wages and other employee
benefits of personnel directly engaged in
any of the said activities;
2. Interest expense except interest charged
by or paid to the head office on funds
considered/classified as assigned
capital of the branch;
3. PDIC premium payments; and,
4. BSP supervision fee.
1.
F 1
TAXATION LAW COMMITTEE: Chairperson: Rhodaline Regoso; Asst. Chairperson & EDP: Maricel Alisuag; Subject Heads:Junelet Mataro, Michelle Alvarez, Efren Dizon, Khan Guieb; Members: Alexis Cervantes. Leizl
Calimaran, Berna Quibal, Noreli De Claro, Jocelyn Gamboa, Albert Rodriguez, Karla Cabel, Joey Caraig, Rodolfo Quitolbo, Liam Pagdanganan, Paul Lawrence Lim, Alder Delloro, John Ivan Tablizo, Ria Ibaviosa, Pancho Vasquez, Aileen
Roxas, Leif Opia
MEMORY
MEMORYAID
AIDIN
INTAXATION
TAXATIONLAW
LAW

Customs, insurance, real estate,

immigration and commercial brokers
General engineering and/or

building contractors
Common carriers or
transportation contractors
Hotel, motel, rest/pension/lodging house

and resort operators

receipts in the form of
1. brokerage fees,
2. commissions and
3. remuneration as such broker

receipts representing the
1. contract price,
2. amount charged for materials supplied with
the services

receipts for engaging in the business of carrying or
transporting passengers or goods or both, by land,
water, or air, for compensation, offering their
services to the public, including transportation
contracting (e.g. operation of public utility buses,
jeepneys, taxi-cabs and cars-for-rent).

receipts derived from the operation of such hotel,
motel, rest/pension/lodging house, resort and other
similar places.

directly and exclusively for brokering activities,
of personnel directly engaged in brokering
activities; and,
2. Commissions paid to its agents who are not
employees of the brokerage firm.

directly and exclusively for such activities,
1. Cost of materials used in construction;
of site laborers and supervisors;
3. Health insurance, workers compensation and
general liability insurance of site laborers and
supervisors;
4. Fees and costs paid to sub-contractors;
5. Costs of performance bonds on the particular
contract;
6. Depreciation/amortization, rentals, repairs
and maintenance of equipment directly used
in the said activities;
7. Costs of moving equipment and materials to
and from the contract site;
8. Costs of design and technical assistance;
and,
9. Supplies and tools directly used in the said
activities.

directly and exclusively for such activities,
of personnel directly engaged in the
operation of the transportation equipment;
2. Toll fees (representing rental for the use of
road);
3. Parking fees (for aircraft, sea craft and motor
vehicles);
4. Franchise fees (representing rental for the
use of road network);
and maintenance of:
Transportation equipment, and
Properties, building and improvements
exclusively used as parking for aircrafts,
sea crafts or motor vehicles;
6. Fuel and lubricants of motor vehicles, aircraft
or sea craft directly used in transporting
passengers and/or goods/cargoes;
7. Meals provided to passengers;
8. Cost of safety paraphernalia and other
supplies for use by passengers (e.g. life
jacket, mask, etc.); and,
9. Annual transportation equipment registration
fee.

directly and exclusively for providing rooms and
other related facilities (e.g. hotel premises, kitchen,
restaurants, recreational facilities, other spaces
used by customers, but should not include office
premises of administrative staff) for the enjoyment
of customers,
of housekeeping staff, concierge personnel
and other hotel/house/resort attendants;
and maintenance of building, properties and
facilities, and equipment directly used in the
said activities;
3. Commissions paid to travel agents for
bookings of guests for such establishments;
4. In case the operator also serves food and
beverage, its direct costs shall include those
allowed to food service establishments; and,
5. Supplies (e.g. hotel room/housekeeping,
kitchen and laundry).
F 2
Roxas, Leif Opia
MEMORY
MEMORYAID
AIDIN
INTAXATION
TAXATIONLAW
LAW

Food service establishments
Lessors of property
Telephone and telegraph,

electric, gas, and water utilities
Radio and/or television broadcasting

receipts derived from the operation of such
restaurant, bars, cafes, clubs, caterers, other
eating/drinking-places, as well as take-out
counters.

receipts derived from lease of properties, such as
real properties, equipment, and other movable
properties.

systems/utilities covered by the law granting the
franchise.

radio/television broadcasting covered by the law
granting the franchise.

directly and exclusively in the preparation and
serving/selling of foods and drinks and other
requirements of the customers,
1. Cost of raw/cooked foods and drinks prepared
and served/sold;
of personnel directly engaged in the said
activities;
3. Depreciation/amortization, rentals, repairs and
maintenance of properties, buildings, furniture
and fixtures, and equipment directly used in
the performance of said activities;
4. Cost of cooking oil, condiments and other
ingredients used in cooking the food; and
5. Royalties paid by franchisee.

directly and exclusively for the property leased,
and shall be limited to
1. depreciation/amortization,
2. rentals,
3. real property taxes/charges,
4. repairs and maintenance, of the properties
being leased,
5. salaries of employees and fees of contractors
hired to provide maintenance (repairs,
cleaning /maintenance of leased properties)
and
6. collection services.

directly and exclusively for the production and
delivery of such systems/utilities,
of personnel directly engaged in the said
activities;
and maintenance of properties and
equipment directly used in the said activities
(i.e., water pipes, electric poles, antennas,
etc.);
3. Interconnection fee and/or share of foreign
telecommunications administration (FA) for
the services they perform;
4. Fuel and lubricants on vehicles or equipment
directly utilized in the said activities;
5. Amortization of franchise or development
fees;
6. Franchise fees; and,
7. Royalties.

directly and exclusively for such production and
broadcasting,
1. Fees
of
talents
hired
for
production/broadcasting;
of production and broadcasting personnel;
3. Tapes and other production materials &
supplies;
4. Satellite charges & wire services;
5. Film rights royalties & dubbing expenses;
6. Set requirements;
7. Rentals for production equipment & facilities;
8. Rentals for locations used exclusively for
production/broadcasting;
9. Costumes, props & prizes; and,
10. Depreciation on production and broadcasting
equipment.
The term `salaries, wages and other employee benefits' as used herein shall include the following employee benefits: bonuses, Pag-ibig, SSS, Medicare, and HDMF
Contributions.
If a cost or expenditure is incurred both directly to provide a service required by a client, and indirectly for administration, operation, or sales-promotion purposes, the taxpayer shall be
allowed a ratable portion of such cost or expenditure to form part of the "Cost of Services."
F 3
Roxas, Leif Opia

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MEMORY

SAN BEDA COLLEGE OF LAW 2003 CENTRALIZED BAR OPERATIONS

Gross receipts shall mean actual or constructive

Gross receipts shall mean actual or constructive

Gross receipts shall mean actual or constructive

Cost of services shall refer to those incurred

Costs of services shall refer to those incurred

Costs of services shall refer to those incurred

Costs of services shall refer to those incurred

and shall be limited to the following:

SAN BEDA COLLEGE OF LAW 2003 CENTRALIZED BAR OPERATIONS

Customs, insurance, real estate,

General engineering and/or

Hotel, motel, rest/pension/lodging house

Gross receipts shall mean actual or constructive

Gross receipts shall mean actual or constructive

Gross receipts shall mean actual or constructive

Gross receipts shall mean actual or constructive

Costs of services shall refer to those incurred

Costs of services shall refer to those incurred

Costs of services shall refer to those incurred

Costs of services shall refer to those incurred

SAN BEDA COLLEGE OF LAW 2003 CENTRALIZED BAR OPERATIONS

Food service establishments

Telephone and telegraph,

Radio and/or television broadcasting

Gross receipts shall mean actual or constructive

Gross receipts shall mean actual or constructive

Gross receipts shall mean actual or constructive

Gross receipts shall mean actual or constructive

Costs of services shall refer to those incurred

Costs of services shall refer to those incurred

Costs of services shall refer to those incurred

Costs of services shall refer to those incurred

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