BIR Ruling No. 431-61

No date supplied BIR RULING NO. 431-61 Reference is made to your letter . . . , requesting information as to what privilege and percentage taxes you are liable. In the copy of the articles of incorporation submitted with your letter, the following appear to be the primary and secondary purposes of that corporation: cdll PRIMARY PURPOSE "To purchase, hold, possess, rent, own, or by any other means or mode allowed by law acquire any and all kinds of real and personal properties such as, but not limited to, lands, buildings, furniture, equipments, machinery, vehicles, conveyances, personal or household effects, office accessories, factory tools, plants, and the like, and to lease, rent, sublease, or sell said properties to any and all persons, corporations, associations, or partnerships under such terms and conditions as the corporation may see fit." SECONDARY PURPOSE "(a) To engage in the real estate business, and purchase, own, sell mortgage, rent, lease, or otherwise deal in or dispose of all kinds of real property, whether improved or unimproved, and be it residential, commercial or agricultural; llcd "(b) To carry on a general import and export business dealing in goods, wares, and merchandise of any kind and nature whatsoever; "(c) To apply for and acquire such rights, franchise, licenses, certificates, or permits required by law or regulation as the corporation may desire or need for its purposes; "(d) To act as factors, managers, agents, or representatives for other persons, associations or corporations; "(e) To lend or borrow money, with or without security, and engage in any type of financing". In answer thereto, I have the honor to inform you that on your real estate business, that is, buying, selling, leasing, subleasing, renting, or otherwise dealing in or disposing of all kinds of real property, you are subject to the real estate dealer's fixed annual tax prescribed in Section 182(A)(3)(s) of the National Internal Revenue Code, the rates of which vary as follows: (1) P150.00, if the annual income derived therefrom is P4,000.00 but does not exceed P10,000.00; (2) P300.00, if said income exceeds P10,000.00 but does not exceed P30,000.00; and (3) P500.00, if said income exceeds the last-mentioned amount. Said business is not, however, subject to any percentage tax. On the business of purchasing, renting, leasing or subleasing personal property, you are not subject to any privilege or percentage tax. In the case of vehicles and conveyances, however, we cannot decide your liability unless we are furnished with the details of the business. For buying and selling personal property, including those exported, you are not subject to any percentage tax but only to the graduated annual fixed tax prescribed in Section 182(A)(2) of the Tax Code, except in the case of articles purchased by you from tax-exempt individuals or entities who imported or brought them into the Philippines tax-free, in which case you will be subject to the advance sales tax of 50%, 30% or 7%, as the case may be, under Sections 184, 185 or 186 of said Code, respectively. For importing and selling goods, wares and merchandise, you are subject to the fixed annual tax of P20.00 provided for in Section 182(A)(1) of said Code and to the advance sales tax at the above-mentioned rates, pursuant to Section 183(b), in relation to Sections 184, 185 and 186 of the same Code. The business of lending money at interest is subject to the lending investor's fixed annual tax imposed in Section 182(A)(3)(u) of the Code, the rates of which are (1) P300.00, in chartered cities and first-class municipalities; (2) P150.00, in second- and third-class municipalities; and (3) P75.00, in fourth- and fifth-class municipalities. However, a lending investor who does business in more than one province shall pay a tax at the flat rate of P300.00. No percentage tax is due on the business. The business of engaging in "any type of financing" and that of acting "as factors, managers, agents, or representatives for other persons, associations or corporations" are too general and vague. Accordingly, we cannot determine your tax liabilities thereon unless a more detailed presentation thereof is made. cdpr