BIR Ruling

July 9, 1973 Mr. Antonio C. Gamit, Jr. 1308-A Gen. Capinpin Bangkal, Makati, Rizal S i r : This refers to your letter dated June 20, 1973 stating that your client, a sole proprietor, is a business agent; that he is contemplating to convert and organize his sole proprietorship into a corporation. Under the foregoing circumstances, you would like to know the answers to the following questions should your client be able to organize and register the corporation which would continue the same business; viz: acd "1. While the new corporation is having its books of accounts, records and business forms approved by and registered with the BIR, could it continue using the books, records and business forms of the sole proprietorship? For this purpose, is it necessary for the corporation to pass and adopt a covering resolution? "2. Is it necessary for the new corporation to formally request the BIR form authority provisionally use the sole proprietorship's books, records and business forms? "3. What other BIR requirements should the new corporation meet in connection with this matter?" In reply, I have the honor to inform you that although the new corporation and the sole proprietorship have the same line of business, the former cannot use the books of accounts of the latter. The sole proprietorship upon retirement from business is required to submit to this Office, within ten (10) days from such retirement or within such time as may be allowed by this Office in special cases, its books of accounts, including the subsidiary books and other accounting records for examination, after which they shall be returned, (Section 337, Tax Code). The new corporation must provide itself with a new set of books of accounts, records and business forms. Moreover, for engaging in business as a business agent, the corporation is subject to the payment of the P50.00 annual fixed tax prescribed in Section 182(A)(1) of the Tax Code and its quarterly gross receipts shall be subject to the 3% contractor's tax imposed in Section 191 of the same Code. aisadc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN 1601-593-5