Are Movie Theaters and Cinemas Subject to BIR Amusement Tax? Why They Pay Local, Not National, Tax

No — movie theaters and cinemas are not on NIRC Section 125’s list of venues subject to the BIR’s national amusement tax. That list covers cockpits, cabarets, boxing exhibitions, professional basketball, and jai-alai/race tracks only. Cinema and theater admission fees are instead taxed locally, under Section 140 of the Local Government Code (Republic Act No. 7160), collected by the province or city treasurer — not the BIR — at a rate of up to 30% of gross receipts.

Where cinemas actually fall: national list vs. local list #

Philippine amusement tax is split across two separate laws collected by two separate governments, and a venue falls under exactly one of them, not both. NIRC Section 125 is a national internal revenue tax the BIR collects from a short enumerated list of venues. Local Government Code Section 140 is a local tax that provinces and cities collect from theaters, cinemas, and other places of amusement that Section 125 deliberately excludes.

A multiplex showing first-run films owes nothing to the BIR under Section 125. A cockpit arena owes nothing to the city treasurer under Section 140. The two lists do not overlap, and a single operator running, say, a cinema and an adjoining bingo hall could owe different taxes to different collecting authorities on each revenue stream.

Why Section 125 leaves cinemas off the national list #

Section 125’s enumerated venues are the product of decades of amendment, and cinemas and theaters were never added to that national list because the Local Government Code already assigns admission-fee taxation on those specific venues to provinces and cities. Leaving cinemas off the BIR’s list is not an oversight — it reflects a deliberate division of taxing authority between the national government and local government units (LGUs) so the same ticket price is not taxed twice under two competing amusement-tax regimes.

The enumerated venues under Section 125 read, in relevant part:

“There shall be collected from the proprietor, lessee or operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball games, Jai-Alai and racetracks, a tax equivalent to…”

Theaters and cinemas showing motion pictures do not appear anywhere in that clause. That silence is the legal basis for treating cinema admission as outside BIR’s national amusement tax base — see the full rate breakdown for the venues Section 125 does cover in NIRC Section 125 Amusement Tax: Cockpits, Cabarets, Boxing, Basketball, and Jai-Alai.

The local amusement tax cinemas actually pay #

Section 140 of the Local Government Code authorizes provinces (and, through the same statutory grant, component cities) to levy amusement tax on theaters, cinemas, concert halls, circuses, boxing stadia, and similar places of amusement, capped at a percentage of gross receipts from admission fees that a local ordinance sets. Republic Act No. 9640 raised the original 1991 ceiling and reworked the collection mechanics specifically for cinema and theater admissions.

The operative text of Section 140(a), as amended, provides:

“The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement at a rate of not more than thirty percent (30%) of the gross receipts from admission fees.”

Section 140(b) then addresses cinemas specifically: the proprietor, lessee, or operator must deduct and withhold the tax and remit it to the provincial (or city) treasurer before dividing the remaining gross receipts with the distributor of the film — meaning the amusement tax comes off the top of box-office receipts, ahead of the film distributor’s revenue share. The exact rate charged in a given city or province depends on that LGU’s own ordinance, up to the 30% statutory ceiling — check the specific ordinance for the province or city where the cinema operates before computing the exact figure due. (Republic Act No. 9640, amending Section 140(a) of Republic Act No. 7160, the Local Government Code of 1991.)

Are cinema tickets subject to VAT on top of the local tax? #

No — the Supreme Court has confirmed that gross receipts from cinema and theater admission are also outside the 12% VAT system, so a moviegoer’s ticket carries only the LGU’s local amusement tax, not VAT layered on top of it. In Commissioner of Internal Revenue v. SM Prime Holdings, Inc. and First Asia Realty Development Corporation, G.R. No. 183505, decided February 26, 2010, the Supreme Court denied the BIR’s attempt to collect VAT on cinema admission receipts and struck down the revenue issuance (Revenue Memorandum Circular No. 28-2001) that had tried to impose it.

The Court’s reasoning turned on legislative intent: cinema and theater operators had always been treated as subject to amusement tax rather than the sales/percentage tax regime that VAT replaced, and nothing in the VAT law’s legislative history showed Congress meant to change that when VAT was introduced. As the decision’s reasoning is commonly summarized in case digests and commentary on the ruling, the Court found “the legislature never intended to include cinema/theater operators or proprietors in the coverage of VAT.” Because a direct fetch of the full decision text was not available for this article, treat that specific phrasing as a secondary-sourced paraphrase of the Court’s holding rather than a confirmed verbatim court quote — the substantive outcome (cinema admission receipts are outside VAT) is well corroborated across multiple independent case summaries and is not in dispute.

This VAT treatment is a separate legal question from the Section 125 national amusement tax discussed above — cinemas are outside both the BIR’s Section 125 amusement tax and BIR’s VAT, but for two different legal reasons layered on the same underlying local-tax framework. For the broader VAT-exclusion landscape, see VAT-Exempt Transactions Under NIRC Section 109 and VAT vs. Percentage Tax in the Philippines.

Worked example: ticket sales vs. concession sales at the same cinema #

A cinema chain’s monthly revenue typically has at least two distinct tax treatments running side by side — admission receipts taxed locally under Section 140, and concession sales taxed as ordinary VAT-able retail — and mixing them up on a tax return is a common, avoidable error.

A cinema operator in a Metro Manila city reports the following gross figures for the month:

Ticket sales (₱2,000,000). This amount is not reported as VATable sales on BIR Form 2550Q, and it is not subject to the BIR’s Section 125 national amusement tax because cinemas are not on that enumerated list. Instead, assuming the city ordinance sets the local amusement tax rate at, say, 10% of gross admission receipts (up to the 30% statutory ceiling under LGC Section 140), the operator withholds and remits ₱200,000 to the city treasurer, deducted from box-office receipts before the film distributor’s share is calculated per Section 140(b).

Concession sales (₱350,000). These are an ordinary sale of goods — popcorn and drinks are tangible personal property, unrelated to the admission-fee exemption the SM Prime Holdings ruling addresses. If the operator is VAT-registered, output VAT of ₱42,000 (12% of ₱350,000) applies and is reported on BIR Form 2550Q like any other retail sale; if the concession counter operates below the VAT threshold or under a separate non-VAT registration, percentage tax under Section 116 would apply instead.

The net result: of the ₱2,350,000 total gross receipts, only the ₱350,000 concession figure ever touches a BIR VAT or percentage tax return. The ₱2,000,000 in ticket sales is entirely a local government tax matter, reported and paid to the city or provincial treasurer, not to the BIR.

Frequently asked questions #

Do movie theaters and cinemas pay the BIR’s national amusement tax under Section 125? #

No. NIRC Section 125 lists only cockpits, cabarets/night or day clubs, boxing exhibitions, professional basketball games, and jai-alai or race tracks. Theaters and cinemas showing motion pictures are not on that enumerated list, so cinema operators do not remit a Section 125 national amusement tax to the BIR on their admission receipts.

Who collects amusement tax on cinema tickets, and how much is it? #

The province (or city, under the same authority) collects amusement tax on cinema admission fees under Local Government Code Section 140, at a rate the local sanggunian sets by ordinance, up to a ceiling of 30% of gross receipts from admission fees as amended by Republic Act No. 9640. The proprietor withholds and remits it to the provincial or city treasurer, not the BIR.

Is VAT also charged on top of the local amusement tax for cinema tickets? #

No. In Commissioner of Internal Revenue v. SM Prime Holdings, Inc. and First Asia Realty Development Corporation, G.R. No. 183505, February 26, 2010, the Supreme Court ruled that gross receipts from cinema/theater admission are not subject to VAT, striking down a BIR circular that had tried to impose it. Cinema tickets carry only the local amusement tax, not VAT on top of it.

If cinema tickets aren’t VAT-able, are popcorn and other concession sales at the same cinema VAT-exempt too? #

No. The VAT exclusion in CIR v. SM Prime Holdings applies specifically to gross receipts from admission to the movie showing. Popcorn, drinks, and other concession items sold at the same cinema are a separate sale of goods and remain subject to the regular 12% VAT (or percentage tax, if the concessionaire is VAT-exempt) like any other retail sale.

Why did the law separate cinema taxation from the Section 125 national amusement tax? #

The legislative design avoids taxing the same admission fee twice under two different national and local regimes. The Local Government Code already gave provinces and cities the power to tax theater and cinema admissions when the NIRC’s amusement tax provisions were enacted, so Congress left cinemas and theaters out of the Section 125 national list and let local government units retain that revenue source instead.

Summary #

Movie theaters and cinemas are conspicuously absent from NIRC Section 125’s enumerated national amusement tax venues — a list limited to cockpits, cabarets, boxing exhibitions, professional basketball, and jai-alai/race tracks, all collected by the BIR. Instead, cinema and theater admission fees are taxed locally under Local Government Code Section 140, at a rate up to 30% of gross receipts as amended by Republic Act No. 9640, collected by the province or city treasurer rather than the BIR. The Supreme Court’s ruling in CIR v. SM Prime Holdings (G.R. No. 183505, February 26, 2010) confirmed cinema admission is outside VAT as well, striking down a BIR circular that tried to impose it. The one carve-out operators must still track carefully: concession sales like popcorn and drinks at the same venue are an ordinary VAT-able (or percentage-tax-able) sale of goods, entirely separate from the admission-fee tax treatment.