Exemption from Graduated Annual Fixed Tax

June 16, 1980 BIR RULING NO. 072-80 Francisco Motors Corporation 2233 Pasong Tamo, Makati Metro Manila Attention: Mr . Eusebio E . Sta . Barbara Vice-President for Finance Gentlemen : This refers to your letter dated January 28, 1980, requesting legal opinion on whether your branches are subject to separate graduated annual fixed tax computed on the basis of their gross annual sales during the preceding calendar year. You have represented that you are an assembler and manufacturer of light trucks, jeepneys and utility vehicles and that your assembly and manufacturing operation is located at Las Pias, Metro Manila; that your sales network consists of branches and dealers throughout the country; that all deliveries to dealers are billed and taken up as sales of your head office at Makati; and that in case of shipments of units to your branches, the same are considered merely as transfer of stocks. You are also represented that your head office is paying a fixed tax of P100.00 and that all sales of your branches are consolidated in the head office for purposes of the sales tax. In reply, I have the honor to inform you that under the foregoing facts, your branches are not subject to the graduated annual fixed tax, since their sales are subject to the sales (percentage) tax. Under Section 192(2) of the Tax Code of 1977, as amended, the graduated annual fixed tax is payable by every person who is not required to pay the percentage tax . . . ." However, pursuant to Section 188 of the Tax Code of 1977, as amended, each of your branches selling your manufactured vehicles is considered a separate or distinct establishment or place where business subject to tax is conducted; hence each branch is liable for the payment of a separate annual fixed tax of P100.00 imposed by Section 192(1) of the same Code. aisadc Very truly yours, RUBEN B. ANCHETA Acting Commissioner