Tax Liability of a Forest Concessionaire

March 30, 1959 BIR RULING NO. 141-59 The Naredco, Inc. General Tinio Nueva Ecija Gentlemen : In reply to your letter of even date, I have the honor to inform you as follows: A person who purchases logs from the owner of a concession and sells the same in the same form is subject to the graduate annual fixed tax (C-13) prescribed in Section 182(A)(2) of the Tax Code. This tax is based on the gross annual sales and shall be payable at the beginning of the business and thereafter, not later than January 20 of each year. The amount of tax payable at the commencement of the business is P10.00 A person who purchases logs from the owner of a concession and converts them into lumber for sale is considered a manufacturer of lumber subject to the fixed tax of P20.00 prescribed in Section 182(A)(1) and to the 7% sales tax under Section 186, both of the Tax Code. The fixed tax is payable at the beginning of the business and, thereafter, annually or semi-annually at the option of the taxpayer. The 7% sales tax is based on the gross selling price of the lumber less the cost of the logs used in the manufacture and is payable within twenty days after the end of each month. If the purchaser is an operator or owner of a sawmill, the 7% sales tax shall be computed on thirty-three and one third per centum (33 1/3%) of the gross cost of the logs purchased during any given month intended for the manufacture of lumber. A forest concessionaire who is at the same time an operator or owner of a sawmill who removes logs from his concession for the purpose of cutting them into lumber for sale is subject to the fixed tax of P20.00 and the 7% sales tax imposed under Sections 182 and 186 both of the Tax Code. The 7% sales tax on lumber is based on the gross selling price of the same without any deduction. If the said concessionaire, aside from manufacturing lumber, also sells logs from his concession then he shall be subject to another fixed tax of P20.00 as a producer of logs and the 7% sales tax on the logs sold by him. In other words, if a forest concessionaire is both a producer logs and a manufacturer of lumber he is subject to two fixed taxes of P20.00 each. The 7% sales tax on the logs shall be based on the gross selling price of the same without any deduction. aisadc A forest concessionaire who sells the logs produced by him is subject to the fixed tax of P20.00 and the 7% sales tax based on the gross selling price of the logs without any deduction, pursuant to Sections 182 and 186, respectively, of the aforesaid Code. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue