Taxability of a Cinematographic Film Producer

October 23, 1968 BIR RULING NO. 028-68 The Chief Accountant Screen Communication Arts Network, Inc. Room 607 Rufino Building Ayala Avenue Makati, Rizal S i r : This refers to your letter dated May 8, 1968 requesting information as to the taxes due from you under the following facts: prcd "I. PRODUCTION We are being paid for the service to produce 30 seconds or one-minute commercial film in behalf of our clients. "II. MEDIA NETWORK We do the service of exhibiting one minute, 35 MM commercial films to several theaters. These films are produced and owned by our clients." You have orally elucidated on the foregoing to the effect that under "PRODUCTION", the Corporation produces the films upon previous order and that its clients pay for the films thus ordered; that under MEDIA NETWORK, clients deliver their own films to the Corporation, which makes arrangements with the theaters for the projection of the films on the screen; that the Corporation pays the theaters directly for the projection of the films; and that, on the other hand, it collects its fees directly form its clients for services rendered. In reply, I have the honor to inform you that for producing commercial films which it sells to its clients, Screen Communication Arts Network, Inc. is considered a cinematographic film producer. As cinematographic film producer, it is liable for the specific tax due on the commercial films it produces pursuant to Section 146 of the Tax Code and to the privilege tax of P200.00 annually pursuant to Section 182(A)(3)(w) of the same Code. For effecting the exhibition on theater screens the Commercial films owned by its clients Screen Communication Arts Network, Inc. is considered a business agent within the contemplation of Section 191 of the Tax Code and as such, it is subject to the 3% tax provided in said Section and to the annual fixed tax of P75.00 pursuant to Section 182(A)(3)(w) of the same Code. cdta Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue