Tax Exemption on the Producer of Logs

December 16, 1959 BIR RULING NO. 624-59 Mr. Angel M. Vecino Attorney-at-law R-208 Martinez Bldg. Dasmarias. Manila S i r : Reference is made to your letter dated December 10, 1959 stating the following: "Mr. German B. Araas is the owner of a private woodland duly registered with the Bureau of Forestry. In view of his desire to transform said private woodland into an agricultural land, he entered into an exploitation contract with my client, the Aguinaldo Development Corporation, whereby the latter was authorized to exploit the timber resources of the land. Aguinaldo Development Corporation is actually engaged in the logging business. The logs produced by Aguinaldo Development Corporation is exported by it." You now request information as to whether or not, under the exploitation contract, your client, Aguinaldo Development Corporation is an independent contractor and whether or not the logs exported by it is subject to the sales tax. In reply thereto, I have the honor to inform you that under the foregoing facts, Aguinaldo Development Corporation is considered the producer of the logs and, therefore, its exportation thereof is exempt from the sales tax, pursuant to section 188 of the Tax Code. Under the circumstances, Aguinaldo Development Corporation cannot be considered an independent contractor and, therefore, it is not subject to the 3% tax prescribed by section 191 of the Tax Code. LLphil Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue