BIR Ruling

January 8, 1970 Dynasave Enterprises, Inc. Davao City Attention: Mr . Lito Monico C . Lorenzana General Manager Gentlemen : This refers to your letter dated September 8, 1969, requesting information as to the internal revenue taxes you are liable to for engaging in the following business activities: "First, we secure, in behalf of consumers, discount privileges from numerous particular establishments through contracts with the latter. These contracts are not of agency in its legal sense, these establishments not being our principals. In fact, they have adhered to our terms of the contract, which is principally the maintenance of the discount rates they have granted. Moreover, they have undertook payment of service-promotion fees to the corporation. Such service and promotion comes about when the corporation sells, in its own capacity, discount cards to consumers who can avail of the same in contracted establishments and establishments will guaranteed of a steady flow of card-carrying customers. This way, ours is a service corporation. "Secondly, the corporation intends to undertake the advertisement, by mass media, of all promotional and privilege sales of various business firms offering the same." In reply, I have the honor to inform you that under the given set-up, Dynasave Enterprises, Inc. is a business agent subject to the fixed annual tax of P75.00 and 3% tax on its gross receipts pursuant to Sections 182(A)(3)(w) and 191 of the Tax Code. It is also subject to the income and residence taxes. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue