Firm Engaged in Selling Pre-need Life Memorial Plans Deemed a Dealer in Securities

May 22, 1985 BIR RULING NO. 079-85 209 137-84 079-85 Gentlemen : This refers to your letter dated April 16, 1984 requesting a ruling as to whether or not your client, Paz Memorial Services, Inc., is a dealer in securities as defined under the National Internal Revenue Code, as amended. You have represented that Paz Memorial Services, Inc., is engaged in the business of selling life memorial plans or the so-called buy-now-die-later plans to pre-need buyers to whom the memorial services will be rendered at the time of death; that your client does not sell the plan or any other security of any company and has been paying the 3% contractor's tax on its gross income. Based on the foregoing facts, you now pose the following questions: "1. Is an issuer of a pre-need life plan, classified as dealer in securities by SEC, also considered as a dealer in securities as defined by the National Internal Revenue Code? "2. What kind of percentage tax should a seller of pre-need life plans pay?" In reply, please be informed that Section 187(r) of the Tax Code, as amended, provides that a "dealer in securities" includes all persons who for their own account are engaged in the sale of stock, bonds, exchange, bullion, coined money, bank notes, promissory notes, or other securities as licensed by the SEC. (See also Rev. Regs. Nos. 12-80 and 14-80) Section 2(a) of B.P. Blg. 178, otherwise known as the Revised Securities Act likewise provides that securities include, among other, pre-need plans , pension plans, life plans, joint venture contracts, and similar contracts and investments where there is no tangible return on investments plus profits but an appreciation of capital as well as enjoyment of particular privileges and services. Such being the case, for engaging in the business of selling pre-need life memorial plans, your client is a dealer in securities within the contemplation of Section 187(r) of the Tax Code and Batas Pambansa Blg. 178; hence, as such, it is not subject to the contractor's tax but to a fixed annual tax of P300.00 imposed by Section 192(3)(Z) of the Tax Code and to 6% tax on its gross income, pursuant to Section 209 of the same Code as amended and further amended by P.D. No. 1959. aisadc Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner