Unregistered General Partnership is Subject to the Corporate Income Tax

December 4, 1959 BIR RULING NO. 631-59 Mr. Filemon T. Siao San Jose Street Extension Taclobo District Dumaguete City S i r : In reply to your letter dated May 18, 1959 bearing on yours of April 12, 1955, I have the honor to inform you that an unregistered general partnership is subject to the corporate income tax provided for in section 24 of the National Internal Revenue Code, even if the capital of said partnership is less than P3,000.00. This is for the reason that only duly registered general co-partnerships are exempted from the corporate income tax, the partners thereof being liable for said income tax in their individual capacity. It is to be noted, in this connection, that the purpose of registration with the Securities and Exchange Commission under Art. 1772 of the New Civil Code is entirely different from the purpose of registration with said Commission under section 26 of the National Internal Revenue Code for while the former is necessary for the validity of contracts of partnership having a capital of three thousand pesos or more, the latter is necessary only for the purpose of exempting partnerships from the corporate income tax. To claim, therefore, that since only partnerships having a capital of P3,000.00 or more are required to be registered for their validity, partnerships having a capital of less than P3,000.00 are deemed registered, is not in order. Said unregistered partnerships having a capital of less than P3,000.00 are perfect and valid partnerships but are included in the term "corporation" for the purposes of the income tax under section 84(b) of the Tax Code. They are subject to the corporate income tax under section 24 of said law, even if the distributive shares of each partner are reported in their individual income tax returns. In view of the foregoing, the FITSI Business Services & Co. is liable to the corporate income tax. You are. therefore, requested to pay, within in ten (10) days from receipt of this letter, the amount of P53.00 as corporate income tax of said partnership for the year 1954 in order that this case may be closed and terminated. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue