A leading Philippine travel associations are pressing the government to clarify tax rules for agency transactions, warning that inconsistent interpretations by Revenue District Offices (RDOs) are driving up compliance costs and sparking audit disputes.
The Philippine Travel Agencies Association (PTAA) reiterated its call after previously submitting a joint position paper to the Department of Tourism. The group plans to raise the issue again with new Tourism Secretary Dita Angara-Mathay.
In the position paper, the association requested government assistance in elevating their concerns to the Bureau of Internal Revenue (BIR). PTAA urged the issuance of a Revenue Regulation or Revenue Memorandum Circular specifically addressing travel agencies, tour operators, travel management companies, and destination management companies.
A major point of contention is the expanded withholding tax (EWT). Corporate clients sometimes apply the 2 percent EWT to the full invoiced amount—including airline tickets, hotel bookings, and visa costs—rather than limiting it to the agency’s service fee or markup.
The association said this practice inflates tax liabilities since agencies are merely intermediaries collecting payments on behalf of suppliers.
Documentation challenges also complicate compliance. Airlines and foreign suppliers often fail to issue BIR-compliant receipts, forcing agencies to rely on remittance records, vouchers, and billing statements that are inconsistently accepted by RDOs.
Agencies additionally face high merchant fees on credit card transactions, which are frequently charged on gross booking amounts, further squeezing profit margins.
The travel group said clearer guidance from the BIR is essential to reduce compliance burdens and prevent costly disputes.
