Here comes the taxman. Are you ready for this?
Bureau of Internal Revenue (BIR) chief Kim Henares has her sights on Uber, Grab and other app-based transport network companies (TNCs).
According to the BIR commissioner, their agency is closely coordinating with the Land Transportation Franchising and Regulatory Board (LTFRB) to track tax payments of these TNCs and their partner operators and drivers.
In recent days, Grab and Uber were given accreditation by the LTFRB. Grab was the first one to secure their accreditation while Uber just secured theirs recently, beating the deadline set by LTFRB.
Henares said the BIR may soon release a new regulation if the need arise which will cover vehicle drivers of Uber, Grab and other TNCs. She also mentioned that UBER, Grab, other TNCs, and their partners are all businesses which have taxes due that must be settled according to law. Yes, we as partners are now a business entity, specifically a sole proprietorship. Remember we registered for a business name with DTI? and signed the Motion for Provisional Authority Terms and Conditions?
“Like any businesses, they are covered by the laws of taxation on entities engaged in business—from registration to issuance of receipts, to filing and payment of taxes,” Henares said. “They are engaged in the provision of services and are covered by all the provisions of the Tax Code for business engaged in the provision of services.”
With the legalization of the app-based transport services, comes the requirements and policies of the government, as well as the collection of taxes. Partners and Drivers must now comply to these requirements set by the government, or suffer grave penalties and fines. A few days ago, LTFRB said that they will impose fines of P200,000 to those drivers caught operating without accreditation.
We are reminded of a classic joke that “licensing” or any other regulation, is what it’s called when a government “takes away your right to do something and then sells it back to you.”
So what’s next for Uber, Grab and their partners? On to the next chapter!
Watch out for our series of articles here in Uber MNL Tips regarding the matter.
Also, you can LIKE us on Facebook to get the latest updates.
This made me rethink of buying a car for uber use.
Admin, can you please post a tax calculator, or a guide for sole proprietorship?
Thanks in advance
Yep. We’ll release the article soon. Watch out for it 😉
id wait for the said tax calculator article you’ll be coming out with soon. as the saying goes,
“in life there are only two things which are sure….one is DEATH and the other one…TAXES.”
Good one! HHahaha
I am also looking forward to the tax calc. you will be releasing.
More power! 🙂
Will do. We’re focusing first on the LTFRB regulation transition. 🙂
Since partner Operator will now pay income tax, percentage/VAT for their pay out from Uber, how about the income of the driver?
Let us say for example the driver receives 40% share. If the driver will not issue Official Receipts in favor of the Operator, the operator cannot claim as expenses his driver’s fee, worse, the operator shall be taxed for the share of the driver.
Does Uber requires the accredited driver to have their own BIR accredited official receipts?
You can structure the business in the way that the driver can be contractual (no need for taxes or contribution) OR as a regular employee (taxed, with contributions). It actually depends how you structure it and what the recommendation of the accountant will be 😉
Drivers/employees do not issue ORs. Taxes are withheld from their income.
that will be the predicament of every operator. If the driver would be considered either as contractual or regular employee, either way, the operator is obliged to withhold tax (expanded) and remit the same to the BIR, this is will be mandatory since the operator will claim the driver’s fee as expenses, otherwise, risk the possibility that the BIR will ran after the operator for the disallowance of expense or failure to remit taxes. right? correct me if im wrong.
It would be different if the driver will share for the payment of all taxes, i.e percentage/vat and income tax. In this case, it will appear that the operator and driver are partners, and they share the profit. Pero I doubt kung may papayag na driver na kaltasan sila ng tax ng operator as share nila sa percentage tax at quarterly/annual income tax. do drivers agree with this? kinalkaltasan tlaga sila ng tax nioperator?
I doubt din if may driver na papayag na mag issue sila ng official receipt nila everytime they receive their full 40% share, and bahala na sila sa sarili nilang tax. But i think this is a better solution.
Employees don’t issue ORs. It depends how you will structure your business. You can declare your drivers as regular or contractual employees. Kindly watch out for our series of articles about TNVS taxes
You can also read our article on this:
Are you still going to have an article about BIR tax computation?
Thanks a lot! 🙂
ive already submitted the tnvs documents last week and now i received a text message from UBER stating that they did not received anything from me.
Kindly clarify with Uber at
hi admin. I’ve been using Uber for a month already and charge it for business related transpo expense. Since the official receipt being sent to my email does not meet Official Receipt requirement as per BIR, we are not allowed to use it for company reimbursement. Are you going to issue an OR the soonest? We want to use Uber but the downside of this is the official receipt. Thank you.
As per Uber. it’s the partners & drivers who should issue you the O.R. not Uber. However, most drivers don’t issue receipts yet.
Does engaging with Uber guarantees income for fulltime? Can someone give me an idea? Thanks!
Uber rides may soon become less convenient for the public as tax authorities plan to require the issuance of receipts—a rule ignored by many taxi operators.
Bureau of Internal Revenue (BIR) Deputy Commissioner Nelson Aspe said new guidelines would be issued to spell out the tax responsibilities of all parties in the Uber system.
Apart from the issuance of receipts, the BIR said it expected owners of cars used for Uber rides to file tax returns. Uber drivers who don’t own the cars they use will also be considered employees, hence appropriate taxes should be withheld from their salaries.
Uber rides will also be subjected to value-added tax (VAT), which will add 12 percent to total costs. Aspe said the BIR would charge it retroactively.
“All of these taxes are in the present law,” Aspe told reporters at the sidelines of a financial services forum hosted by accounting firm Punongbayan & Araullo. “We’re telling everyone what the law provides… It’s just a reiteration of what they should pay.”
Uber drivers who own the cars they use would have to issue receipts as self-employed individuals, like doctors and lawyers. Uber drivers who work for car owners, meanwhile, should issue receipts on behalf of their employers.
Aspe said BIR would dig through information from credit card companies, which are required to make regular reports to the government on all transactions. This will ensure that the tax liabilities of drivers, owners and Uber itself are computed accurately. Uber passengers are charged online using their credit card information.
The same rules will apply to other ride-sharing services like GrabTaxi, which offers a similar service called GrabCar, the revenue official added. Unlike Uber, however, GrabTaxi’s business is entirely cash-based, which, according to Aspe, is more difficult to track.
The guidelines on Uber rides, which Aspe said would not create new rules but define how existing laws should be applied, would be issued before the end of the year.
The requirement for receipts is the latest legal hoop faced by Uber and other ride-sharing service providers. Earlier this year, the Philippines became the first country in the world to issue formal regulations for ride-sharing services, which allow passengers to book rides using smart phone apps.
Uber vehicle owners and drivers were required to get licenses from the Land Transportation Franchising and Regulatory Board (LTFRB), much like regular taxis. Uber’s accreditation as a Transport Network Company was approved in August.
Thanks for sharing. For more info: http://ubermanilatips.com/ltfrb-accreditation-what-it-really-means-for-us-partners-peers-and-drivers/
How can I get the official receipt from my latest trip? Thanks.