Tax Imposed on the "Home Industry"

April 29, 1960 BIR RULING NO. 220-60 The Aces Commercial Trading 37 H. Lozada, San Juan Rizal Gentlemen : Your letter dated January 21, 1960, containing queries about the so-called "home industry" which was addressed to the Director of Commerce was referred to this Office for reply to the questions bearing on internal revenue taxation. In your letter we mention was made about the nature of this so-called "home industry". As the term suggests, we may, however, presume that this "home industry" produces manufactures commodities. As a producer or manufacturer, it shall be subject to the fixed and percentage taxes prescribed in section 182(A-1) and 184, 185, or 186, respectively, of the Tax Code, the rate of the latter tax depending on the classification of the articles manufactured. The fixed tax of P20.00 may be paid, at the option of the taxpayer, annually on or before January 20, or semi-annually, on or before January 20 and July 20 of each year. (Sec. 180, Tax Code). The percentage tax is based on the gross selling price of the article less the deductible cost of raw materials used and is paid within twenty days after the end of month. (Sec. 183, Tax Code.) However, if a "home industry" consists merely of parents and children living as one family working in their homes and the value of each day's production by each person does not exceeds P5.00, said industry is exempt from the aforementioned fixed and percentage taxes. (Secs. 182 (C-4); 188(d) 2nd par., Tax Code). Persons operating "home industries" are subject to the income tax. They should keep and use books of accounts, namely, the journal and the ledger or their equivalents where all their business transactions should be daily recorded. If their gross quarterly sales, earnings, receipts, or output do not exceed P5,000.00, they should, unless they should, unless they keep and use the journal and the ledger, keep and use the simplified set of bookkeeping Records. (Sec. 334, Tax Code as implemented by Revenue Regulations No. V-I, as amended). These books should, before being used, be submitted for approval and registration with other the Regional Office, Provincial Revenue Officer, or the deputy provincial or city treasurer of the place of business of the taxpayer. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue