Non-Suspension of the Imposition of the Fixed and Percentage Taxes

July 23, 1981 BIR RULING NO. 122-81 198-00 000-00 122-81 Mr. Virgilio J. Calaguas Certified Public Accountant 1-B M. Marcos Street San Juan, Metro Manila Dear Mr. Calaguas : This refers to your letter dated April 27, 1981 in behalf of your client, CARICA AGRO-MARINE DEVELOPMENT COMPANY, INC., requesting our opinion regarding the suspension of Section 198 of the National Internal Revenue Code, as amended. It is represented that Carica Agro-Marine Development Company, Inc., is engaged solely in the production of table eggs; that the company is being subjected to the 1% sales tax imposed in Section 198 of the Tax Code, as amended, for the fiscal years 1978 and 1979. In reply, I have the honor to inform you that Letter of Instruction No. 753, temporarily suspended the imposition of the 1% sales tax on agricultural products under Section 198 and the fixed tax under Section 192(1) both of the Tax Code of 1977, as amended, on small farmers only, until the definition of a marginal farmer is drawn up and approved by the President of the Philippines. Accordingly, said fixed and percentage taxes are not suspended insofar as non-marginal farmers are concerned. This Office has ruled that "marginal farmers" refer to small, subsistence farmers and does not cover the affluent ones and those who are engaged in large-scale farming. (Revenue Memorandum Order No. 29-78) In this connection, the President under Letter of Instruction No. 1055 has defined a marginal farmer as an individual engaged in small scale subsistence farming, whose sales, barters, or exchanges of agricultural products produced by himself do not exceed a gross value of P20,000.00 per annum . Finally, this Office believes that the President in issuing the aforesaid LOI No. 1055 intended to give relief only to marginal farmers who are individuals. In view thereof, the imposition of the fixed and percentage taxes prescribed in Sections (192(1) and 198 of the Tax Code are not suspended during the years 1978 and 1979 insofar as your client is concerned. cdt Very truly yours, RUBEN B. ANCHETA Acting Commissioner