AA-1

TAXATION LAW COMMITTEE: Chairperson: Rhodaline Regoso; Asst. Chairperson & EDP: Maricel Alisuag; Subject
Heads:unelet Mataro! Michelle Al"are#! E$ren Di#on! %han &uieb; Me'bers: Alexis Cervantes. Leizl Calimaran, Berna
Quibal, Noreli De Claro, Jocelyn Gamboa, Albert Rodriuez, !arla Cabel, Rodol"o Quitolbo, Liam #adananan, #aul
La$rence Lim, Alder Delloro, Jo%n &van 'ablizo, Ria &baviosa, #anc%o (as)uez, Aileen Roxas, Lei" *+i,a
MEMORY AID IN TAXATION LAW
SAN BEDA COLLEGE OF LAW 2003 CENTRALIZED BAR OPERATIONS
Reproduction in any form of this copy is strictly prohibited!!!
MEMORY AID IN TAXATION LAW
SAN BEDA COLLEGE OF LAW 2003 CENTRALIZED BAR OPERATIONS
Reproduction in any form of this copy is strictly prohibited!!!
ANNEX AA: ENTERTAINMENT, AMUSEMENT AND RECREATION EXPENSES
(Re"enue Regulation )o. *+,-++-.
Defii!i" "f Te#$%
E!e#!&i$e!, &$'%e$e! &( #e)#e&!i" e*+e%e% i),'(e%:
1. representation expenses, and/or
2. depreciation or rental expense relating to entertainment facilities.
Re+#e%e!&!i" e*+e%e% shall refer to expenses incurred by a taxpayer in connection with the conduct of
his trade, business or exercise of profession, in entertaining, proiding amusement and recreation to, or
meeting with, a guest or guests at a dining place, place of amusement, country club, theater, concert, play,
sporting eent, and similar eents or places.
Representation expenses shall not refer to fixed representation allowances that are sub!ect to
withholding tax on wages pursuant to appropriate reenue regulations.
E!e#!&i$e! f&)i,i!ie% shall refer to"
a# a yacht, acation home or condominium$ and
b# any similar item of real or personal property used by the taxpayer primarily for the entertainment,
amusement or recreation of guests or employees.
%&R '()*( +(, +A-.A/,R *0A)12 A 3,.R,*)A+)&4 &R R,4+A0 ,-.,42,.
A yacht shall be considered an entertainment facility under these regulations if its use is in fact not
restricted to s+eci"ied o""icers or em+loyees or +ositions in such a manner as to ma5e the same a
fringe benefit for purposes of imposing the fringe benefits tax.
T&*+&-e#% C".e#e(
1. )ndiiduals engaged in business, including taxable estates and trusts
2. )ndiiduals engaged in the practice of profession
6. 3omestic corporations
7. Resident foreign corporations
8. 9eneral professional partnerships, including its members.
Re/'i%i!e% f"# De(')!i0i,i!-
1. )t must be paid or incurred during the taxable year
2. )t must be"
a# directly. connected to the deelopment, management and operation of the trade, business or
profession of the taxpayer, or
b# directly related to or in furtherance of the conduct of his or its trade, business or exercise of a
profession.
6. )t must not be contrary to law, morals, good customs, public policy or public order.
7. )t must not hae been paid, directly or indirectly, to an official or employee of the national goernment, or
any local goernment unit, or of any goernment-owned or controlled corporation :9&**#, or of a foreign
goernment, or to a priate indiidual, or corporation, or general professional partnership :9..#, or a
similar entity, if it constitutes a bribe, 5ic5bac5 or other similar, payment.
8. )t must be duly substantiated by ade;uate proof. +he official receipts, or inoices, of bills or statements of
accounts should be in the name of the taxpayer claiming the deduction.
<. +he appropriate amount of withholding tax, if applicable, should hae been withheld therefrom and paid to
the =ureau of )nternal Reenue.
E*+e%e% N"! )"%i(e#e( &% E!e#!&i$e!, A$'%e$e! &( Re)#e&!i" E*+e%e%
1. ,xpenses which are treated as compensation or fringe benefits for serice" rendered under an employer-
employee relationship, pursuant to Reenue Regulation 2->?, 6->? and amendments thereto$
2. ,xpenses for charitable or fund raising eents$
6. ,xpenses for bonafide business meeting, of stoc5holders, partners or directors$
7. ,xpenses for attending or sponsoring an employee to a business league or professional organi@ation
meeting$
8. ,xpenses for eents organi@ed for promotion, mar5eting and adertising including concerts, conferences,
seminars, wor5shops, conentions, and other similar eents$
<. &ther expenses of a similar nature.
Cei,i1 " E!e#!&i$e!, A$'%e$e! &( Re)#e&!i" E*+e%e
-or 'ax+ayers enaed in sale o" oods or +ro+erty
- 1/2 percent :.AA8# of net sales :gross sales less sales, returns/ allowances and sales discounts#.
-or tax+ayers enaed in sale o" services includin exercise o" +ro"ession and use or lease o"
+ro+erties
- &ne percent :1B# of net reenue :gross reenue less discounts#
-or tax+ayers deliverin income "rom bot% sale o" oods.+ro+erties and services
- =ased on an apportionment formula, ta5ing into consideration, the percentage, of the net sales/net
reenue to the total net sales/net reenue but in no case shall exceed the maximum percentage
ceiling.
Apportionment %ormula"
4et sales/net reenue x Actual
AA-1
TAXATION LAW COMMITTEE: Chairperson: Rhodaline Regoso; Asst. Chairperson & EDP: Maricel Alisuag; Subject
Heads:unelet Mataro! Michelle Al"are#! E$ren Di#on! %han &uieb; Me'bers: Alexis Cervantes. Leizl Calimaran, Berna
Quibal, Noreli De Claro, Jocelyn Gamboa, Albert Rodriuez, !arla Cabel, Rodol"o Quitolbo, Liam #adananan, #aul
La$rence Lim, Alder Delloro, Jo%n &van 'ablizo, Ria &baviosa, #anc%o (as)uez, Aileen Roxas, Lei" *+i,a
MEMORY AID IN TAXATION LAW
SAN BEDA COLLEGE OF LAW 2003 CENTRALIZED BAR OPERATIONS
Reproduction in any form of this copy is strictly prohibited!!!
MEMORY AID IN TAXATION LAW
SAN BEDA COLLEGE OF LAW 2003 CENTRALIZED BAR OPERATIONS
Reproduction in any form of this copy is strictly prohibited!!!
+otal net sales and net reenue ,xpense