Tax Liability of an Operator and/or Lessee of the Printing Machine

April 12, 1960 BIR RULING NO. 185-60 Mr. Josue C. Rodriguez Dumaguete City S i r : Reference is made to your letter dated April 11, 1959 stating the following: cdtech "A. a religious corporation that own some printing equipment which it formerly operated for its own printing jobs, has, for reasons of economy, stopped using this equipment. B, a number of persons religiously inclined and desirous to utilize the equipment referred to above to serve the printing needs of religious institutions related to A, have solicited from A the use of this printing equipment. A is willing to allow B to have the use of the printing equipment subject to the condition that the printing equipment be made available to A, together with the personnel that B may employ to operate the said equipment, in the execution of such printing work as A may have need of for itself. A will furnished all the materials needed and will pay directly to B's employees the latter's compensation. "At the same time, B intends to use the abovementioned printing equipment for printing work primarily for religious institutions related to A and secondarily for the public. For these jobs A is willing to take out a license (privilege tax) and pay the percentage taxes provided for in Section 191 of the National Internal Revenue Code. "b. Questions: "1. Will B be liable for any taxes other than the percentage taxes provided for in Section 191 of the National Internal Revenue Code in connection with the printing that it may do for the public? 2. Will B be liable to pay any tax for the work that is done by the employees who normally do its work for the public when these employees do the work for A on jobs and with materials belonging to A, which pay the workers directly for their labor? (It may be noted in this connection that while doing the work for A these workers who, during the rest of their time work for B, do not work for B but work directly for A so that, in effect, B merely arranges to make the services of these workers available to A.) "3. Is A under any obligation to pay any taxes on its printing jobs done on its equipment and which its materials by the employees of B?" Your case was duly investigated and your representation was found correct. Under the above facts, B the operator and/or lessee of the printing machine is subject to the annual fixed tax of P20.00 and to the 3% printer's tax for printing jobs rendered by it for a fee, either to religious organizations or to the public. For its option to use the printing machine for its own purpose, A is not subject to any business tax. However, any amount received by A from B for the latter's use of the machine is subject to income and residence taxes. aisadc Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue