BIR Ruling No. 108-62

October 3, 1962 BIR RULING NO. 108-62 The Acting Regional Director Regional District No. 3 M a n i l a S i r : There is herewith returned to you the docket bearing on the case of TOHO KAIUN KAISHA, c/o American Steamship Agencies, Meyers Bldg., Manila. lexlib It appears that the taxpayer is a foreign corporation organized under the laws of Japan and engaged in maritime transportation with vessels touching Philippine ports. It has been paying, through its local agent the American Steamship Agencies, the common carrier's fixed and percentage taxes; however, it does not, either personally or through its agent, keep books of accounts and other accounting records and so there is nothing upon which may be based the determination of its taxable gross receipts. On the other hand, the taxpayer contends that it is a non-resident foreign corporation and, therefore, exempt from the obligation of keeping books and other accounting records in the Philippines. The vessels of the taxpayer come to the Philippines and carry passengers and freight therefrom. As it is subject to common carriers' tax, which it is actually paying, the taxpayer should keep the required records, pursuant to section 334 of the Tax Code, as implemented by Revenue Regulations No. V-1, the Bookkeeping Regulations. Moreover, to hold otherwise would be to leave to the mercy of the taxpayer the amount of taxes it should pay. As correctly stated by the Court of Tax Appeals in the case of Maria B. Castro vs. Collector (C.T.A. Case No. 141, December 29, 1956) "The reason for the requirement to keep books of accounts is stated in the law (Sec. 334, Tax Code) itself, that is, in order that all taxes due the government may readily and accurately be ascertained and determined any time of the year." Accordingly, this Office is of the opinion and so holds that the taxpayer is legally bound to keep and use books of accounts and other accounting records and having failed to do so, it is liable in accordance with section 352 of the Tax Code. Such liability may, however, be compromised by the payment of a penalty in accordance with the schedule prescribed in General Circular No. V-237. Be guided accordingly. Very truly yours, JOSE B. LINGAD Acting Commissioner of Internal Revenue