BIR Ruling

December 19, 1972 The Regional Director Revenue Region No. 4 San Fernando, Pampanga S i r : This refers to your letter dated October 24, 1972, requesting a definite ruling as to whether the San Fernando Electric Plant and Power Co., Inc. is subject to the fixed annual tax of P500.00 as provided for in Section 182(A)(3)(gg) of the Tax Code, as amended by R.A. No. 6110. aisadc In reply, you are informed that Section 182(A)(3)(gg) of the Tax Code as amended, covers franchise grantees who are subject to the franchise tax under Section 259 of the Tax Code and those who are paying special rates of percentage taxes on their gross receipts as provided in their respective legislative or municipal franchises. (See B.I.R. Ruling No. 70-021, April 20, 1970). The San Fernando Plant and Power Co., Inc. falls under the category of those who are paying special rates of percentage taxes on their gross receipts as provided in their respective legislative franchise. Furthermore, Section 2-A of Republic Act No. 3660 (franchise of San Fernando Electric Co., Inc.) only precludes the imposition of taxes on its capital stock, franchise, right of way, earnings and all other property owned or operated by the grantee. Said franchise does not preclude the imposition of the fixed annual tax in question which is a tax to be paid by the taxpayer for the privilege of pursuing a business as a franchise grantee. (Sec. 178, Tax Code). In view thereof, the assessment of that Office for fixed tax under Section 182(A)(3)(gg) is in order. cdtech Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue