Tax Liability of a TV Film Distributor

September 23, 1959 BIR RULING NO. 471-59 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants 490 San Luis, Manila Gentlemen : Reference is made to your letter dated September 10, 1959 stating the following: LLjur "A domestic corporation has a contract agreement with a United States TV film producer to contact local exhibitors for the purpose of renting its films. The domestic corporation also acts as agent or distributor of the United States producer and receives a commission for its services. We believe that the rental of films is subject to the 2% tax on gross receipts under Section 195 of the Tax Code and the commission received by the distributor or agent is not subject to such tax." You now request information as to the tax consequences of the foregoing transaction. In reply thereto, I have the honor to inform you that, under the given facts, the domestic corporation is considered a TV film distributor, and, as such, it is subject to the fixed and percentage taxes prescribed by sections 182(A)(3)(v) and 195 of the Tax Code. The taxable gross receipts of the corporation under this transaction consists of its commission. On the other hand, such portion of the gross TV film rentals as constituting the gross income of the foreign TV film producer is subject to 30% withholding tax, pursuant to section 54 of the aforesaid Code, as amended by Republic Act No. 2343. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue