Tax Liability of Management Corporations

June 17, 1959 BIR RULING NO. 314-59 The Industrial Management Center, Inc. Suite 103 Moserco Building Port Area, Manila Gentlemen : In your letter dated April 10, 1959 you requested for a ruling of this Office on what business taxes your corporation should pay. As stated in the Articles of Incorporation of your firm, the primary and secondary purposes for which it was formed are: lexlib "PRIMARY "1. To provide consultation services to the business and industrial community in the Philippines on all matter dealing with the management and administration of a business or industrial enterprises, and on all matters leading toward the solution of every management problem in every particular circumstances in production, marketing and distribution, finance, planning and developing company organization and structure, administration, industrial relation; "2. To provide management and technical training services to the business and industrial community for the development of management executives and industrial supervisors; for the elimination of wastes of resources and the development of efficiency, productivity, and improve quality of performance in business and industry; and, generally for the promotion and advancement of modern and scientific managerial skills and practices in all segment of the business and industrial community; "3. To conduct and publicize research projects and statistical studies on any subject dealing with current developments in the field of management, economics, business and industry so as to promote and develop industrial and business ventures of any kind and description; "SECONDARY "4. To promote, organize, re-organize, operate, manage, and/or administer any establishment or business or any person, corporation, association, institution, private or government, in the Philippines or in any part of the world, in the capacity of principal, agent, representative, or general manager; and "5. Generally, to do and perform those various acts and things which are necessary, proper and incidental to the carrying out of the purposes for which this corporation is formed or any incident thereof; exercising any and all rights, powers and attributes of similar corporations in general and especially of corporations of like nature and organized under and by virtue of the laws of the Philippines." In reply thereto, I have the honor to inform you that management corporations are generally considered, for purposes of the business taxes, independent contractors subject to an annual fixed tax of P20.00 and the 3% tax prescribed in sections 182(A)(1) and 191, respectively, of the Tax Code. Which are management corporations is a question, however, which has to be established in accordance with their mode of operations. In other words, no hard and fast rule may be established. Each case will have to be determined on its merits. From the statement of the primary and secondary purposes of your corporation, your corporation may be subject to several taxes, such as those imposed on independent contractors, commercial brokers or business agents. This Office will not, however, commit itself because of the insufficiency of pertinent data. We shall establish your tax status only after actual investigation and verification of your mode of operations. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue