BIR Ruling

December 13, 1972 Miss Gracia A. Rosalinas Philippine Deposit Insurance Corporation 3rd & 4th Floors, G & A Building 2303 Pasong Tamo Extension Makati, Rizal Madame : This refers to your letter dated September 1, 1972 requesting opinion on the following case: cdt "A friend of mine is a grantee of a franchise to operate public utility buses and jeeps (PUB's and PUJ's). For sometime she operated the business herself until her employees staged a strike. She decided to sell the units and line. However, the buyers of the units would not buy the line because of the responsibilities it entails. So for some months now, my friend just collect franchise fees from the persons who bought the units. The query is: who will keep the books of account and pay the taxes due on the business." In reply, I have the honor to inform you that under the foregoing circumstances, the buyers of the units are the ones engaging in the business as common carriers. Accordingly, they are the parties who should keep the required books of accounts and pay the internal revenue taxes due on the said business. As regards the franchise grantee, he is subject to income tax on the "franchise fees" paid to him by the buyers of the units. acd Very truly yours, MISAEL P. VERA Commissioner of internal Revenue