BIR Ruling No. 123-65

November 12, 1965 BIR RULING NO. 123-65 The President and General Manager Salvino-Campos Engineering Corporation 290 Malapantao Street Mandaluyong, Rizal S i r : This refers to your letter dated November 3, 1965 stating that you are engaged in a general machine shop business; that your books are kept on the accrual basis; and that your monthly percentage tax has been consistently based on your monthly gross receipts. You now request opinion as to whether the monthly percentage tax should be based on monthly gross receipts or on monthly collection. In reply, I have the honor to inform you that the 3% tax prescribed in Section 191 of the Tax Code is based on the actual receipts of the contractor. Accordingly, accounts which remained uncollected at the end of the month should not be declared for taxation during the month for purposes of the percentage tax. However, the said amounts should be returned for taxation and the tax due thereon paid during the month in which they are collected. This Office believes that the foregoing rule is applicable to you, notwithstanding the fact that you have adopted the accrual method of reporting income. LLjur Very truly yours, (SGD.) MISAEL P. VERA Acting Commissioner of Internal Revenue