Tax Imposed on Business Activities

March 30, 1989 BIR RULING NO. 051-89 100 103 000-00 051-89 M a d a m : This refers to your letters dated December 7, 1988 and January 20, 1989, requesting a ruling as to the taxes you will be subject to in case you engage in the following business activities, viz: cdtech "1. To act as commission agent or broker for jewelry, gems, precious stones and metals and other articles of value of every description; "2. To buy and sell, either for your own account or for the account of others, jewelry, gems, precious stones and metals and other articles of value; and "3. To extend credit or advances, with interest, to owners of jewelries or other commodities for sale." In reply, please be informed as follows: 1. In acting as commission agent or broker, you shall fall within the purview of a "commercial broker". Such being the case, your gross receipts whatever, shall be subject to 10% value-added tax (VAT) pursuant to Section 102 of the Tax Code, as amended by E.O. No. 273 and as implemented by Section 3 of Revenue Regulations No. 5-87."Gross receipts means the total amount of money or its equivalent representing the contract price, compensation or service fee, including the amount charged for materials supplied with the services and deposits or advance payments actually or constructively received during the taxable quarter for the services performed or to be performed for another person, excluding value-added tax [Sec. 102(a), Tax Code as amended]. 2. Likewise, in buying and then selling any or all of the aforestated articles, you shall be subject to 10% VAT based on your gross selling price pursuant to Section 100 of the said Code. 3. Finally, in extending credit or advances at interest to the owners of said articles, you shall be considered a lending investor subject to 5% tax based on gross income pursuant to Section 116 (formerly Section 175) of the same Code. Moreover, your gross income shall be subject to income tax pursuant to Section 21 of the Tax Code, as amended. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner