BIR Ruling

July 12, 1967 The General Manager Archery Philippines Ltd. c/o NAAP Rizal Memorial Field Manila S i r : This refers to your letter dated June 16, 1967 requesting information as to what internal revenue taxes your partnership shall be liable to, if it engages in business in accordance with the following purposes: 1. To promote and propagate the sport of Archery in the Philippines by operating an Archery Range that would cater to the needs of archery enthusiasts in the Philippines for a consideration and profit. 2. Give archery instructions, clinics, competitions, tournaments and other archery activities that would foster and promote archery locally. 3. Purchase and sell archery tackles and equipment, locally or abroad to fill the needs of the sport and in order that an effective promotional program can be carried out, and 4. To undertake other related activities connected with the sport of archery; plan and implement promotional and expansion programs for the furtherance and perpetuation of Archery in the Philippines. In reply, I have the honor to inform you as follows: Although the operation of the archery range may be considered a business the partnership shall not be liable to any internal revenue tax on business, there being no law taxing such business. If it purchases tackles and equipment locally for the purpose of resale, it shall be considered a dealer, subject to the graduated fixed annual tax prescribed by Section 182(A)(2) of the Tax Code. If it imports tackles and equipment for the purpose of sale, it shall be considered an importer, subject to the P20.00 fixed tax per annum prescribed by Section 182(A)(1) of the Tax Code and to the advance sales tax prescribed in Section 183(b), in relation to Section 186, also of said Code. The partnership is not subject to income tax if it is duly registered (See Section 24). However, the individual partners shall be liable to income tax on their shares in the partnership profits whether distributed or not. The partnership shall further be liable to the basic and additional residence taxes. cdt Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue