BIR Ruling

July 23, 1969 Mr. Urbano Garcia 6 Scout Fuentebella Quezon City S i r : This has reference to your letter dated March 25, 1969 and your supporting memorandum for the Chief, Law Division, dated March 27, 1969, requesting for the reconsideration of our letter-ruling dated January 30, 1969 which involves in effect the proper amount and time of payment and basis of the real estate dealer's fixed tax. It appears that you commenced business in the second semester of 1964 receiving in that year a rental income of P3,503.00. You commenced business, however, without prior payment of fixed tax. Subsequently, you made the following payments: Date of Payment Official Receipt No. Amount Period Covered Jan. 6, 1965 C-2094951 P75.00 1st Semester, 1965 June 8, 1965 C-3276660 75.00 2nd Semester, 1965 Jan. 14, 1966 C-3287965 75.00 1st Semester, 1966 July 20, 1966 C-4900183 75.00 2nd Semester, 1966 Jan. 5, 1967 C-5476487 75.00 1st Semester, 1967 July 14, 1967 C-1200805 75.00 2nd Semester, 1967 Jan. 8, 1969 A-0626351 150.00 Whole year of 1968 In this connection, please be informed as follows: The fixed tax on business must be paid before any business can be lawfully begun or pursued, and the tax is payable annually or semi-annually at the option of the taxpayer. (Sections 178 and 180, Tax Code). And when a business is newly begun in any year the tax shall be reckoned from the commencement of the current semester. (Sec. 181, Tax Code) LexLib Applying the foregoing provisions of law, you should have paid the tax for the second semester of 1964, the initial amount of which is P75.00, the minimum amount, there being no basis just as yet therefore and it appearing clearly at the time of commencement of the business that your annual rental will exceed P4,000.00. You seem to be of the impression that a fixed tax paid in a current year corresponds to the tax for the preceding year. This impression is wrong. Thus the tax you paid on Jan. 6, 1965 corresponds not for the 2nd semester of 1964 but for the first semester of 1965 as indicated in our tabulation above. As it now appears, you have not paid the tax for the 2nd semester of 1964 and the 1st and 2nd semesters of 1968. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue