Taxability of Share of an Association in the Sugar Milled by Hind Sugar Central

April 28, 1966 BIR RULING NO. 019-66 The Manaoag Mill District Sugar Producers' Cooperative Marketing Association, Inc. Manaoag, Pangasinan Gentlemen : This refers to your request for exemption from the 2% tax on your alleged share in the sugar milled by the Hind Sugar Central. prcd In reply, I have the honor to inform you as follows: While it is true that as an association organized under the provisions of Act No. 3425, you are, among others, exempt from all kinds of percentage taxes, nevertheless, the exemption is understood to cover only those percentage taxes to which the association would otherwise be directly and personally liable. It appears, however, that each member-planter of your association has a direct milling contract with the central. The tax on his share in the milled sugar is, therefore, his direct and personal liability. The association cannot claim for such exemption for the tax due is not its direct and personal liability. The mere fact that the planter-member authorized the central to issue the quedans covering his share in the milled sugar in the name of the association by the execution of a "Marketing Agreement and Power of Attorney" does not transfer liability for the tax to the association. Such marketing agreement and power of attorney serves nothing more than to facilitate the marketing of the sugar of the members which is the principal purpose for the organization of the association. For the foregoing considerations, your request has to be as it is hereby denied. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue PRISCILLA R. GONZALES Asst. Revenue Operations Head (Legal)