BIR Ruling

September 3, 1973 Miss Ellen Lay 3639 Dupil St. Manila M a d a m : This refers to your letter dated March 6, 1973 requesting information whether proprietors or operators of hotels who are not engaged in buy and sell nor in the manufacturing or processing business are required to submit yearly inventory list. cdt In reply, I have the honor to quote hereunder Section 13 of Revenue Regulations No. V-1 otherwise known as "The Bookkeeping Regulations", thus: "Sec. 13. Record of inventories . Persons required by law to pay internal-revenue taxes on business shall keep, in addition to the other books and records prescribed in these regulations, a book of inventories, in which they shall record in detail the quantity, description, unit cost, and total cost of every item of their stocks-in-trade, materials, supplies and all other goods found in the premises of their establishments at the time they start business and at the close of the calendar year or accounting period. The inventory at the beginning shall be made and submitted to the Collector of Internal Revenue, if the place of business is in Manila, or to the deputy provincial or city treasurer, if in a municipality or city, within ten days after securing the privilege tax-receipt or starting the business, and the subsequent inventories not later than thirty days after the close of the calendar year or accounting period. This period may, in meritorious cases, be extended by the Collector of Internal Revenue. "Deputy provincial and city treasurers shall, upon receipt of such inventories, immediately send the same to the corresponding provincial revenue agent who shall keep and preserve them for purposes of reference." Under the above-quoted provision, persons subject to internal revenue taxes are required to keep book of inventories for recording in detail the quantity, description, unit cost, and total cost of every item of their stocks-in-trade, materials, supplies and all other goods found in the premises of their establishment. In the case of proprietors or operators of hotels, although they are subject to pay internal revenue taxes, they do not store goods or stocks-in-trade which necessarily are for sale, their business being mainly the use of the hotel by guests as a temporary abode. Such being the case, this Office is of the opinion and so holds that hotel operators or proprietors are not required to keep book of inventories. Hence, they are not required to submit yearly inventory list. However, the foregoing ruling applies only in the case of purely hotel business. If the proprietors or operators of hotels also maintain restaurants and bars, under the above-quoted provision, they are required to keep book of inventories of raw materials and stocks used. Hence, they are required to submit yearly inventory list. acd 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."