Exemption from the Fixed and Percentage Taxes

February 12, 1959 BIR RULING NO. 088-59 Mr. Jose Arcellana R-304 R. Skawinsky Building R. Hidalgo-Barbosa Streets Quiapo, Manila S i r : Reference is made to your letter of the 2nd instant, requesting exemption from the fixed and percentage taxes as follows: cdll "In this connection, I was able to save and borrow money with which I bought a small (6" x 9") hand-operated table-model "Minerva" printing press which does not use any electricity, and other accessories and enough printing types good for setting up texts intended for calling cards or letterheads for stationaries. I was also able to buy a good Rolleiflex camera and I intend to improvise our own darkroom. With all these equipments which are all in my house located at Lot No. 7, Block 625, along 'Newsmen's Row' in Project 6, Quezon City, it is my desire to teach my only son (18) and three daughters (15, 13 and 11) all presently studying, the rudiments of photography and printing and later on perhaps with their vocational knowledge they may be able to help improve our modest family income. cdpr "Because of the high cost of materials which I must use in teaching my children the above avocations, in all honesty I will be forced to solicit small simple jobs the productions of which I can personally supervise my children. As such procedures might require the issuance of the necessary invoices and receipts, I would like to plead with your good office if such a small family enterprise such as this humble one being contemplated could be exempted from the payment of any internal revenue (fixed and percentage) taxes. "Inasmuch as we will all be working in my own house together with no one else but the immediate members of my family and, in view of the probability that my children will not earn for themselves the sum of P4 each per day because of the limitations imposed by our inadequate equipments, I am just hoping that perhaps Sub-Paragraph (d) of the Fourth Paragraph of Section 182 and Sub-Paragraph (d) of the Second Paragraph of Section 188 of the National Internal Revenue Code would be applicable in my humble case." In answer thereto, I have the honor to inform you that the exempting provisions of subparagraph (d), fourth paragraph (now par. (4), subsec. (c) of Section 182 of the Tax Code and those of sub-paragraph (d), second paragraph of Section 188 of the same Code have reference only to producers of commodities subject to the sales tax under either Section 184, 185, or 186 of said Code. Such being the case, and considering that the businesses of printing and photography are taxable under Section 191 and not under either of the three sections just mentioned, your request cannot be granted. Nevertheless, should your gross monthly receipts from either, or both, businesses not exceed the sum of P200.00, you will be exempt from the fixed tax on either or both, as the case may be. This does not hold true, however, in the case of the percentage tax, because no matter how small the amount of receipts that may be derived by you from the pursuit of said businesses, just the same you will be subject to the 3% tax prescribed in Section 191 of the Tax Code. cdti In this connection, it may be stated that receipts or invoices must, prior to their use, be approved and registered in accordance with Section 19 of Revenue Regulations No. V-1, otherwise known as the Bookkeeping Regulations, as amended. Pursuant to Section 204 of the Tax Code, you are under obligation to issue receipts or invoices for every service rendered valued at P2.00 or more. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue