Philippines Tax Agency Clarifies Taxation of Domestic, International Passenger Service Charge Integrated into Airline Tickets

The Philippine Bureau of Internal Revenue Dec. 14 issued Revenue Memorandum Circular No. 122-2021, clarifying the taxation of domestic and international passenger service charges integrated into airline tickets. The clarification includes: 1) the obligation of the airport authority and domestic and international airline companies to reflect VAT liability and VAT exemptions separately on invoices; 2) that service fees paid by the airport authority to airline companies are subject to 5 percent creditable VAT and 2 percent creditable withholding tax; and 3) that passenger service charges are treated independently from the gross Philippines billing tax and the 3 percent common carrier’s ...