Whether Fixed Taxes Can Be Collected from Affluent Farmer-Producers

May 27, 1986 BIR RULING NO. 069-86 161 (1) 000-00 069-86 S i r : This refers to your telegram dated January 27, 1986 requesting a ruling on a query stated as follows: "CAN WE COLLECT FIXED TAXES FROM AFFLUENT FARMERS PRODUCERS SINCE THEY ARE SUBJECTED TO ZERO PERCENTAGE TAX." In reply, I have the honor to inform you that your query is answered in the negative. The annual fixed tax of P200.00 prescribed under Section 161 (1) (formerly Section 192(1)) of the Tax Code as amended by P.D. No. 2006 is imposed only on persons who are required to pay the percentage tax. Since agricultural products are now taxable at zero percent rate pursuant to Section 165(A)(4) of the Tax Code, as amended, it follows that affluent farmers engaged in large-scale farming or producers of articles classified as agricultural products are no longer subject to the said annual fixed tax. It is emphasized, however, that the locally produced agricultural products must be sold, bartered or exchanged in their original state by the producer or owner of the land where produced in order that the same will be exempt from payment of the fixed annual tax. In this connection, "original state" as defined includes the transformation of said products by the application of simple processes to preserve or otherwise prepare said products for market such as freezing, drying, salting, smoking or stripping. Rice and corn shall be considered in their original state even if they have undergone milling. (Revenue Regulations No. 2-86 dated December 27, 1985) cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner