Exemption from the Payment of Quarterly Percentage Tax - Pawnshops

January 23, 1990 BIR RULING NO. 006-90 116 Ruling dated 3/2/68 006-90 Gentlemen : This refers to your letter dated November 15, 1988 requesting a ruling as to whether pawnshops may be considered as lending investors. In reply, please be informed in the negative. In fact, as early as March 2, 1968, this Office had already ruled that "lending investors . . . do not include persons engaged in pawnshop business". Thus, it will be noted that prior to the effectivity of E.O. No. 273 otherwise known as the Value-Added Tax Law on January 1, 1988, lending investors and pawnshops are subject to different fixed taxes. Moreover, while lending investors, then as now, are subject to the percentage tax of 5% on the gross income under Section 116 (formerly Section 175) of the Tax Code, pawnshops never became subject to the percentage tax. (BIR Ruling No. 135-82 dated April 22, 1982). This shows that our internal revenue law does not consider a pawnshop a lending investor. You may, therefore, disregard the notice of the local BIR threat requiring you to pay the quarterly percentage tax as a lending investor. cd Very truly yours, (SGD.) JOSE U. ONG Commissioner