Tax Rates of a Paper Mill Corporation

March 13, 1959 BIR RULING NO. 150-59 Mr. Romulo F. Trajano 431 Regina Building Escolta, Manila S i r : In reply to your letter dated March 9, 1959, I have the honor to inform you that the following are the taxes a paper mill corporation is subject to: prcd Before the corporation begins to engage in the business, it must pay a fixed annual tax (C-14) of P20.00. Thereafter, and within twenty days after the end of each month it must pay the percentage tax at the rate of 7% of its gross monthly sales or receipts less the cost of deductible raw materials. Upon organization of the corporation, the same shall immediately be liable to the corporate basic residence tax of P5.00 and at the end of the current year it may be further subject to the additional residence tax, depending upon the assessed value of the real property owned by it during the said year and/or amount of gross receipts derived from its business during the same year pursuant to Section 2 of Commonwealth Act No. 465 (Residence Tax Law). On or before the fifteenth day of May following the close of the calendar year, or if the corporation chooses the fiscal year basis, on or before the fifteenth day of the fifth month following the close of the fiscal year, the same should pay the income tax upon income equal to the sum of the following: cdpr Twenty per centum of the amount by which such total net income does not exceed P100,000.00; and Twenty-eight per centum of the amount by which such total net income exceeds P100,000.00. You also inquired as to "whether expenses incurred after the approval of the articles of incorporation but before the commencement of the actual operations of the said paper mill be deferred until such time when the said mill shall be able to start its operations and derive income therefrom." On the assumption that the query is being made for the purpose of the income tax, please be informed that generally, ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business are deductible only during the year when the same were incurred. Capital expenses, however, like organization expenses may be deferred to a certain number of years. Consequently, if the expenses referred to in your query are capital expenses, the same may be deferred. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue