BIR Ruling

February 3, 1977 Marts Trading P.O. Box 4031 Manila Attention: Mr . A . I . Montenegro, Jr . Manager Gentlemen : This refers to your letter requesting clarification as to your liability for privilege taxes for engaging in the business of exporting locally purchased agricultural products (castorbeans) under the following facts: cdti "1. Is a C-13 required to be paid for every separate or distinct establishment where " our principal office in Quezon City "a. is the sales office for goods bought by branch offices. "b. Keeps books of accounts. "c. does not undertake any purchasing of the exportable goods. "d. nor does not make the export loading in the port of Manila? "o ur Padada, Davao del Sur Office "a. engages purely in buying operation and therefore is not a sales office. "b. does not keep books of accounts and all accounting documents are forwarded to Q. C. office for recording. "c. hauls the locally purchased goods to the port of Davao for loading in a foreign vessel as export sales of Quezon City office. " our Davao City office "a. engages also in the buying operation only and therefore is not a sales office. "b. is a liaison office to oversee the operation in Davao such as the export loading and the buying operation in Davao del Sur. "c. Forwards all its accounting documents to Quezon City for recording. "2. For purposes of exportation, are we similarly required to pay C-14 and if so, are all our establishments required to have separate C-14? "3. Also for purposes of processing by your BIR Regional office in Davao City is/are C-13 and/or C-14 paid by our principal office in Quezon City acceptable or is an additional C-13 and/or C-14 for our Davao City office, which is not a sales office be further required?" In reply, I have the honor to inform you that on the basis of your representations that your Padada and Davao City Offices merely buy agricultural products and do not sell the same as it is your main office in Quezon City which effect the sales of said products, your aforesaid branches are not considered separate or distinct business establishments within the purview of Section 178 of the Tax Code, and therefore, said branch offices are not subject to the graduated annual fixed tax prescribed in Section 182(A)(2) of the Tax Code. However, your aforesaid branch offices should keep records of their purchases and exports effected at the ports of Davao pursuant to sales by the main office at Quezon City . cdt It appearing from the facts stated in your aforesaid letter that you are not a manufacturer or producer, and that you merely purchase the agricultural products you sell or export, you are not subject to the sales tax. And since you are not subject to the sales tax, you are not liable for the C-14 fixed tax; instead, you are subject to the C-13 fixed tax, pursuant to Section 182 of the Tax Code, the amount thereof depending on your gross sales during the preceding year. (See subsection (a)(2) of Section 182, Tax Code). As regards your 3rd query, please be advised that if, after verification by our Regional Office at Davao City, it is ascertained (a) that your are neither a manufacturer or producer, nor an importer, and (b) that your branch offices at Padada, Davao del Sur and Davao City are merely purchasing agricultural products and are not engaged in selling said products, presentation of the C-13 paid at Quezon City shall be considered sufficient evidence of your payment of the fixed tax due on your above-described business. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."