Tax Liability of a Small Rice Mill Operators

March 25, 1959 BIR RULING NO. 166-59 Mr. Aniceto C. Cainghug Baybay, Leyte S i r : This is with reference to your letter dated March 17, 1959, requesting information as to whether or not small rice mill operators whose receipts or earnings depends upon the rentals or compensation paid for palay milled by owners thereof who are farmer-consumers are subject to the 2% tax imposed by Section 189, in relation to Regulations No. 7 of the Dept. of Finance, of the Tax Code. Please be informed that, for purposes of the 2% tax imposed by Section 189 of the Tax Code, no distinction is made between the big and small rice mill operators. Furthermore, the proprietors or operators of rice mills are subject to the said tax notwithstanding the fact that they mill only for compensation the palay belonging to others and destined for home consumption. However, pursuant to Section 4 of Regulations No. 7, otherwise known as the "Rice and Corn Mills Regulations", in case palay or corn is milled for compensation, the 2% tax shall be charged to the owner thereof and shall be withheld by the proprietor or operator of the rice or corn mill. In other words, as operator of rice mill for compensation, you are a mere withholding agent of the Government but if you fail to withhold the 2% tax, as mentioned, you shall be held liable for the payment thereof. In addition to the books of accounts required under Section 334 of the Tax Code, proprietors or operators of rice mills should keep and use the record book prescribed by Section 9 of said Regulations No. 7, the provisions of which are self-explanatory. In this connection, aside from the 2% tax required by Section 189 of the Tax Code, you are also obliged to pay a fixed annual tax of P20.00 pursuant to Section 182(A)(1) of the same Code. LexLib Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue