BIR Ruling

January 31, 1974 The Regional Director Revenue Region No. 11 Naga City S i r : There are turned to you herewith the papers bearing on the letter of Mr. Generoso O. Lorica, O. D. of Sorsogon, Sorsogon which, in effect, requests exemption from the payment of the occupation tax as an optician. In reply, please be informed that under Presidential Decree No. 231 otherwise known as "The Local Tax Code", the power to levy and collect occupation tax has been transferred from the National Government to the Provincial or City Government. Under Provincial Circular No. 22-73 dated September 7, 1973 of the Department of Finance, implementing said Decree, the following paragraph under Title V thereof states: "Any person liable to pay the occupation tax who has already paid the same to the national government shall hereafter pay the tax to the local government concerned effective January 1, 1974. However , delinquencies due and payable before July 1, 1973, the date of effectivity of Presidential Decree No . 231 shall still be paid to the national government . Any person who become liable for the payment of the tax on or after July 1, 1973 shall pay the same to the local government concerned unless he can show proof that the taxpayer has already paid the amount due the national government." (Emphasis ours) Hence forth, therefore, any query affecting occupation tax should be addressed or forwarded to the Department of Finance for a ruling. However, Section 182(B) of the Tax Code expressly provides that opticians are among the professions subject to the fixed annual occupation tax of P75.00 . An optician who, in the exercise of his profession, prescribes or sells eyeglasses or spectacles to his patients after eye examination is not subject to the 7% sales tax prescribed in Section 186 of the Tax Code. Neither is he subject to the said tax on eyeglasses or spectacles grounded or adjusted by means of a machine to fit the individual needs of his patients alone and not for sale to the public in general without eye examination. This is for the reason that the prescribing, grounding or adjusting of said eyeglasses or spectacles are merely incidental to his profession. On the other hand, an optician who buys eyeglasses or spectacles and other optical items and resells them to the public without eye examination is a dealer subject to the graduated annual fixed tax prescribed in Section 182(A)(2) of the Tax Code. However, an optometrist who prepares and makes eyeglasses or spectacles in compliance with the prescriptions of other optometrists or ophthalmologists for the patients of the latter is considered a manufacturer. As such manufacturer, he is subject to the P50.00 annual fixed tax prescribed in Section 182(A)(1) of the Tax Code and his sales thereof is subject to the 7% sales tax prescribed in Section 186 of the same Code. casia Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."