BIR Ruling

August 11, 1966 Mr. Sinforoso Chua Certified Public Accountant Gochan Building Leon Kilat Street Cebu City S i r : This refers to your letter dated July 23, 1966 stating the following: "I have the honor to request for your opinion on the following queries regarding a pawnshop business. LLpr "1. Is pawnshop business considered as a lending investor? "2. What are the internal revenue taxes payable by a pawnshop? "3. Is the sale of articles acquired from unredeemed pledges considered as taxable under Section 182 of the NIRC? "4. Are the articles acquired from unredeemed pledges which remain unsold at the end of a calendar year subject to inventory and same to be submitted to the Bureau on or before January 30th?" In reply thereto, I have the honor to inform you as follows: 1. Pawnshop business is not considered lending investor under Sections 194(u) and 182(A)(u), both of the Tax Code. 2. Pawnshop business is not subject to any internal revenue business tax. However, the receipts derived therefrom shall be declared for purposes of income and additional residence taxes. 3. The sale of articles acquired from unredeemed pledges is not taxable under Section 182 of the Tax Code. However, the interest realized by a pawnshop from his loans plus the amount of his sales of unredeemed articles minus the amount for which they were pawned, and all other income, earnings or receipts derived therefrom are subject to income and additional residence taxes. 4. The inventory of articles acquired from unredeemed pledges which remain unsold at the end of a calendar year or accounting period need not be submitted to the Bureau of Internal Revenue. LibLex Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue