Payment of Fixed and Percentage Taxes

October 10, 1966 BIR RULING NO. 043-66 Mr. Leonides A. Paez Office of the Collection Agent Bureau of Internal Revenue Makilala, Cotabato S i r : This refers to your request for information on the tax liability or liabilities of the following persons engaged in activities hereunder described: cdt 1. "If an owner of a transportation company operates a gasoline station and repair shop exclusively for its own consumption and services, is he exempt from the payment of fixed and percentage taxes. 2. "Kindly inform me whether the BIR Ruling dated September 20, 1955 and BIR Quarterly Bulletin, Volume IV, No. 3 are still in force, where raw rubber is considered a manufactured products and the sale, even if made by the producer or owner of the land is subject to the sales tax of 7%. I am pointing this particular question because the Firestone rubber plantation here which is now tapping in full swing, has not made any declaration or raw rubber produced for purposes of payment of the percentage tax. I am reluctant to call them up as I am in doubt as to the applicability of the said ruling. 3. "Is an operator of a "carinderia" inside a public market exempted from the payment of fixed and percentage taxes? Particular attention should be focused specially on the words "public market". Operators of "carinderia" maintained that as long as their business is within the market compound, they are exempt from the said tax. Opposing opinion also countered that "public market" is only the main building but not the other buildings constructed around it, where different kinds of establishments or products are usually conducted or sold." In reply, you are inform as follows: 1. A transportation company which maintains and operates a gasoline station and a repair shop for the exclusive use of its vehicles is not subject to the fixed and percentage taxes for the reason that the maintenance and operation of said gasoline station and repair shop do not constitute the doing of business. 2. BIR Ruling dated September 20, 1955 wherein this Office held that raw rubber is considered a manufactured product and, therefore, the sale thereof, even if made by the producer or owner of the land where produced, is subject to the sales tax, has already been superseded by the decision of the Supreme Court in the case of the American Rubber Co. vs. Collector of Internal Revenue, G.R. No. L-11178, April 30, 1963. Under said decision, the Supreme Court ruled that rubber products, whether in their original form or not, are within the exemption provided by Section 188(b) of the Tax Code. 3. A public market consists of the site designated therefor by the local government concerned and of the buildings erected thereon by the latter. Carinderias, therefore, operated within the compound of the public market which are operated by Filipinos are exempt from the fixed and percentage taxes pursuant to Sections 182(c)(2) and 188(b) of the Tax Code. cdll Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue