Fixed and Percentage Taxes; Real Estate Dealer's Fixed Tax

September 12, 1979 BIR RULING NO. 089-79 Fixed and percentage taxes ; real estate dealer's fixed tax This refers to your letter dated July 9, 1979 requesting, in behalf of your client, YMT Realty Corporation, owner/operator of Tropicana Apartments-Hotel located at 1630 L.M. Guerrero St., Ermita, Manila, opinion or interpretation whether or not your said client is liable to pay the taxes imposed under the provisions of Section 205-A of the Tax Code, as inserted by Batas Pambansa Bldg. 2. It is represented that your client is the owner of the Tropicana Apartments-Hotel, a 9-storey concrete building composed of several apartments, which was formerly owned by J.R.M. & Co., Inc., and continued to be publicly advertised as an "apartment-hotel," which is actually a misnomer considering that it is not engaged in the hotel business; that your client, in the operation of Tropicana Apartments-Hotel, has continued and maintained the business practices, activities, and undertakings of the former operator, J.R.M. & Co., Inc., particularly with respect to its relationship with the tenants; that your client is still requiring all its tenants to sign a Lease Contract before the latter could occupy and use the apartments, (a sample copy of the Lease Contract is attached to your letter); that except for the rental rates of the apartments which have been increased, your client has maintained the same furnishings, facilities, fixtures, fittings and convenience for the use and benefit of its tenants. In reply, I have the honor to inform you that under the foregoing circumstances and as correctly held by this Office in its ruling of January 3, 1974 under the same factual setting, your client in its operation of the Tropicana Apartments Hotel is considered an operator of an apartment. As such apartment operator, your client is not considered a hotel operator; hence it is not subject to the fixed and percentage taxes prescribed in Sections 192(1) and 205-A of the Tax Code. However, your client is subject to the real estate dealer's fixed tax prescribed in Section 192 (3)(aa) of the Tax Code. The above ruling is based on your representation and the same will be revoked if, after investigation, it is ascertained that the facts are different from those represented.