Payment of the Percentage Tax of IBM Philippines, Inc.

July 3, 1959 BIR RULING NO. 315-59 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P. O. Box 589, Manila Gentlemen : Reference is made to your letter dated December 4, 1958, requesting that your client, the IBM Philippines, Inc., be permitted to pay the percentage tax under either of the following procedures: "Our client, IBM Philippines, Inc., is subject to percentage taxes which, in accordance with law, are payable monthly. The company in the Philippines, together with subsidiaries all over the world, is required by its parent corporation to submit monthly statements of its operations in the Philippines. Considering the deadlines fixed by its parent corporation for the submission of these statements, and the work involved in the preparation thereof, as well as in the preparation of the monthly percentage tax returns that it has to submit before the 20th of each month, it will be necessary for our client to close its books monthly by the 25th of each month. All transactions it may enter into after the 25th of each month will be considered as transactions entered into for the subsequent month. Percentage taxes will be correspondingly paid based on the amounts actually recorded on its books on the date these are closed. We have been informed that the other foreign countries in which IBM operates has permitted the company to do this. If the foregoing does not meet with your approval, we would like to know whether you would permit our client to make an estimate of its sales between the 26th and the end of each month and to accrue such estimates. The estimates will be adjusted in the subsequent month's return so that if the estimate is lower than what was actually received during the period, the additional tax will be paid together with the taxes for the subsequent month's transactions. Conversely, if the estimate is larger than what was actually received, the overpayment will be applied against the subsequent month's percentage tax liability." In answer thereto, I have the honor to inform you that, for lack of legal basis, your request has to be, as it is hereby, denied. The provisions of section 183(a) of the Tax Code on the matter are quite explicit and the Commissioner of Internal Revenue has no power to vary the same. aisadc Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue