BIR Ruling No. 072-62

May 17, 1962 BIR RULING NO. 072-62 Messrs. Reyes, Lim & Arreola, Inc. Magsaysay Building , San Luis, Ermita, Manila Gentlemen : This has reference to your letter requesting information to what privilege and other taxes that corporation is liable under the following purposes: aisadc " PRIMARY PURPOSE "To provide the maritime and shipbuilding industries with service, technical assistance, and research facilities such as, but not limited to and with particular reference to ocean and interisland shipping, shipbuilding, ships, boats, barges, or marine vessels of any kind or descriptions: (a) the preparation, study, analysis, and review of shipbuilding contracts, contract plans and specifications, and maintenance and repair surveys; (b) the supervision of ship construction maintenance and repair, surveys, and operations; (c) assistance in the capacity of shipping and shipbuilding consultants to ship-owners, operators, or agents for the improvement of the ship, design, ship operations, shipbuilding, and ship management, in all that pertains thereto; and (d) the preparation and analysis of statistics and data pertinent and/or relative to the marine industry. Within the limits authorized by law, to lease, purchase, or otherwise acquire, own, exchange, sell, or otherwise dispose of, mortgage, hypothecate, and deal in ships, boats, barges, or marine vessels of any kind or description. " SECONDARY PURPOSES Generally to carry on the business of shipbuilding in all of its branches. To construct, build, operate, and maintain machinery plants, mills, buildings, works, work-shops, laboratories, machinery, power plants, stores, and warehouses, and acquire by grant, purchase, or otherwise, any property or privileges from any authority, individuals, entity, or otherwise, and fulfill and perform the conditions thereof. To buy, sell, produce, manufacture, and deal in marine machinery, appliance, equipment, and plants of any kind or description. To act as general contractors, operators, managers, factors, and agents in the marine or industrial fields except in transportation as general carriers. And to exercise generally all powers and privileges accorded or which hereafter may be accorded to like or similar corporations under the laws of the Government of the Republic of the Philippines." In answer thereto, I have the honor to inform you that for the construction and/or repair of ships, boats and other vessels, that corporation shall be constituted an operator of a dockyard subject to the annual fixed tax of P20.00 and to the 3% tax prescribed in sections 182(A)(1) and 191 of the Tax Code. The manufacture or production by the corporation of marine machineries, appliances and equipment, if done exclusively in connection with construction and/or repair of vessels, is embraced within its business as operator of a dockyard. However, should it also manufacture such articles for the purpose of sale, it shall be considered engaged in separate business, that of manufacturer. As such manufacturer, it shall be subject to the fixed and percentage taxes prescribed by sections 182(A)(1) and 186 of the aforesaid Code. The lease of ships, boats and other vessels is not subject to any business tax. It is understood that receipts and income derived from those business are subject also to the income and additional residence taxes. It is however, regretted that we cannot furnish you the requested information on the rest of the activities unless we are given a clearer idea thereof. Very truly yours, BENEDICTO PADILLA Acting Commissioner of Internal Revenue