In many countries, including the Philippines, hotels often collect various taxes and fees from their guests. These taxes are typically imposed by the government and are meant to generate revenue for local or national purposes. The specific taxes and fees can vary, but one of the common taxes collected by Hotels in the Philippines is Value Added Tax (VAT).
Below are the Frequestionly Asked Questions (FAQs) related to VAT:
1. What is Value Added Tax (VAT)?
Valued Adde Tax (VAT) is a consumption tax added to the cost of goods and services, including hotel accommodations. It is a percentage of the price paid by hotel guests and is intended to generate revenue for the government. Hence, for hotels, VAT is applied to the price paid by guests for staying in hotels and purchasing related amenities or enquiring extra services.
2. What is the VAT rate for hotels in the Philippines?
The standard VAT rate in the Philippines is 12%. This rate is applied to the room rates and services offered by hotels and will be added as VAT to the final bill.
3. Who is responsible for collecting VAT in hotels?
Hotels are responsible for collecting VAT from their guests. The collected VAT is then remitted to the government. For hotels that are selling rooms through digital platforms like Booking.com, Agoda, Traveloka, etc., the responsibility for collecting VAT can be a bit more complex due to the involvement of a third party.
If the payment is "Channel Collect", the online platform is responsible for collecting VAT on behalf of the hotel. The online platform collects the total amount from the guest, including the VAT, and then remits the VAT to the hotel. The hotel, in turn, is responsible for reporting and remitting the collected VAT to the appropriate tax authorities.
4. Is VAT charged on top of the room rate?
Yes, VAT is usually added on top of the room rate. For example, if the room rate is PHP 2,000, and the VAT rate is 12%, the total charge would be PHP 2,240 (PHP 2,000 + 12% VAT).
5. Is VAT applicable to all types of hotel services?
VAT is generally applicable to a wide range of hotel services including accommodations, food and beverage services, and other various amenities or services such as spa services, conference and event space, transportation services, etc.
6. Are foreign tourists exempt from paying VAT on hotel accommodations?
No, foreign tourists visiting and staying at hotels in the Philippines are not exempt from paying VAT. VAT applies to both domestic and foreign guests, and foreign tourists are required to pay the applicable VAT on their hotel accommodations.
7. Is the VAT amount displayed separately on the hotel bill?
Yes, the VAT amount is typically displayed separately on the hotel bill. The bill will normally show the room rate, the calculated VAT amount, and the total amount payable. This transparency allows guests to see the breakdown of charges and be aware of the taxes they are being charged.
8. Can hotels claim back the VAT they collect from the guests?
Hotels can offset the VAT they collect from guests against the VAT they pay on their own business expenses. If the VAT collected is higher than the VAT paid, the difference is remitted to the government.
9. Is VAT refunded for canceled bookings?
The refund of VAT will depend on the hotel cancellation policy itself.
10. Can hotels in the Philippines choose not to collect VAT from the guests?
In the Philippines, hotels are generally required to charge Value Added Tax (VAT) as mandated by the tax laws of the country and are obligated to collect and remit VAT to the government.
That’s all 10 common questions that we heard so far regarding Value Added Tax (VAT) for Hotels in the Philippines. Feel free to share this article if you find it useful and drop any questions in the comment sections if you think there are more questions that should be answered.