Taxability of the Domestic Corporation Engaged in the Importation and Dealership of Glasses, Mirrors and Like Products

March 4, 1987 BIR RULING NO. 067-87 51 (d) 066-83 067-87 Gentlemen : This refers to your letters dated December 9, 1986 and February 5, 1987, stating that your client, Glass World, Inc. is a domestic corporation engaged in the importation and dealership of glasses, mirrors and like products, that your client installs the glasses or mirrors it sells but does not receive a separate fee from the customers for the installation thereof; and that when Glass World, Inc. sells its products to government agencies, the latter deducts and withholds 1% expanded withholding tax and the 4% contractor's tax from the income payments received by your client. You now request a ruling as to whether said income payments are subject to the 1% expanded withholding tax and the 4% contractor's tax. In reply, please be informed that under Revenue Regulations No. 6-85 implementing Section 51(d) [Formerly Section 53 (f)] of the Tax Code, only income payments to persons enumerated therein are subject to the expanded withholding tax. Accordingly, and since dealers of glasses and mirrors are not among those enumerated in said regulations, money payments to your client on its sale and installation of said articles are not subject to the expanded withholding tax. Likewise, since your client merely sells glasses and mirrors without receiving any fee for installing the same, it can not be considered a contractor subject to the 4% contractor's tax imposed by Section 170 (formerly Section 205) of the Tax Code, as amended. Such being the case, the income payments received by your client are not subject to the withholding provisions of Republic Act No. 1051 as implemented by Revenue Regulations No. 20-86. However, for undertaking the importation of glasses, mirrors and like products, your client is subject to 20% advance sales tax based on the total value used by the Bureau of Customs in determining tariff and customs duties, including customs duties and other charges, pursuant to Section 162 (c) in relation to Section 163(4), both of the Tax Code, as amended by Executive Order No. 36. Likewise, for engaging in the original sale of said imported articles, your client is subject to the annual fixed tax of P200.00 in accordance with Section 161(1) of the Tax Code. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner