Publishing the Amendments Effected by Presidential Decree No. 1457 on TITLE V — TAXES ON BUSINESS of the National Internal Revenue Code of 1977, as Amended

October 30, 1978 REVENUE MEMORANDUM CIRCULAR NO. 088-78 SUBJECT : Directing Strict Compliance with Existing Restrictive Policies on Government Expenditures TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, there is published below the full texts of Sections 192, 204, 205, 207 and 326 of the National Internal Revenue Code as amended by Presidential Decree No. 1457, viz.: "SEC. 22. Subparagraph (2) and (3) of Section 192 of the National Internal Revenue Code of 1977 are hereby amended to read as follows: "(2) Persons not subject to percentage tax . Every person who is not required to pay the percentage tax prescribed under this Title shall pay for each calendar year in which the person shall engaged in business a fixed annual tax based upon his gross annual sales during the preceding calendar year, as follows: "Twenty pesos, if the amount of the gross annual sales does not exceed two thousand four hundred pesos; "Forty pesos, if the amount of the gross annual sales exceeds two thousand four hundred pesos but does not exceed ten thousand pesos; "Eighty pesos, if the amount of the gross annual sales exceeds ten thousand pesos but does not exceed thirty thousand pesos; "One hundred sixty pesos, if the amount of the gross annual sales exceeds thirty thousand pesos but does not exceed fifty thousand pesos; "Two hundred fifty pesos, if the amount of the gross annual sales exceeds fifty thousand pesos but does not exceed seventy-five thousand pesos; "Three hundred fifty pesos, if the amount of the gross annual sales exceeds seventy-five thousand pesos but does not exceed one hundred thousand pesos; "Five hundred pesos, if the amount of the gross annual sales exceeds one hundred thousand pesos but does not exceed one hundred fifty thousand pesos; "Nine hundred pesos if the amount of the gross annual sales exceeds one hundred fifty thousand pesos but does not exceed three hundred thousand pesos; "One thousand six hundred pesos if the amount of the gross annual sales exceeds three hundred thousand pesos but does not exceed five hundred thousand pesos; "Three thousand pesos, if the amount of the gross annual sales exceeds five hundred thousand pesos but does not exceed one million pesos; "Five thousand pesos, if the amount of the gross annual sales exceeds one million pesos but does not exceed one million five hundred thousand pesos; "Seven thousand pesos, if the amount of the gross annual sales exceeds one million five hundred thousand pesos but does not exceed two million pesos; "Nine thousand pesos, if the amount of the gross annual sales exceeds two million pesos but does not exceed two million five hundred thousand pesos; "Eleven thousand pesos, if the amount of the gross annual sales exceeds two million five hundred thousand pesos but does not exceed three million pesos; "Fourteen thousand pesos, if the amount of the gross annual sales exceeds three million pesos but does not exceed four million pesos; "Eighteen thousand pesos, if the amount of the gross annual sales exceeds four million pesos but does not exceed five million pesos; "Twenty-two thousand pesos, if the amount of the gross annual sales exceeds five million pesos but does not exceed six million pesos, "Twenty-six thousand pesos, if the amount of the gross annual sales exceeds six million pesos but does not exceed seven million pesos; "Thirty-thousand pesos, if the amount of the gross annual sales exceeds seven million pesos but does not exceed eight million pesos; "Thirty-four thousand pesos, if the amount of the gross annual sales exceeds eight million pesos but does not exceed nine million pesos; "Thirty-eight thousand pesos, if the amount of the gross annual sales exceeds nine million pesos but does not exceed ten million pesos. "If the amount of gross annual sales exceeds ten million pesos, the graduated fixed tax shall be thirty-eight thousand pesos plus one thousand pesos for every one million pesos of gross sales, but the tax shall in no case exceed fifty thousand pesos. Every fractional part of one million pesos in excess of ten million pesos shall be disregarded. "If a merchant is engaged in two or more businesses, one or more of which is subject to and the others exempt from, the percentage tax, he shall pay the graduated fixed annual tax provided above, based on the individual sales of his business not subject to the percentage tax under this Title. The initial graduated fixed annual tax to be paid by the person first engaging in business subject to the said tax shall be twenty pesos." "(3) Other fixed taxes . The following fixed taxes shall be collected as follows, the amount stated being for the whole year, when not otherwise specified: "(a) Brewers, ten thousand pesos; "(b) Distillers of spirits, two thousand pesos, if the production does not exceed one hundred thousand gauge liters; four thousand pesos, if the annual production exceeds one hundred thousand gauge liters but does not exceed two hundred thousand gauge liters; six thousand pesos, if the annual production exceeds two hundred thousand gauge liters but does not exceed three hundred thousand gauge liters; eight thousand pesos, if the annual production exceeds three hundred thousand gauge liters but does not exceed five hundred thousand gauge liters; and ten thousand pesos, if the annual production exceeds five hundred thousand gauge liters: Provided , That if the annual production does not exceed ten thousand gauge liters, only one hundred pesos shall be collected. "(c) Rectifiers of distilled spirits, compounders, and repackers of wines or distilled spirits, two thousand pesos; producers of wines, one hundred pesos; "(d) Wholesale dealers of distilled spirits and wines "1. In the City of Manila, two thousand pesos; "2. In chartered cities other than Manila, one thousand pesos; "3. In any other place, five hundred pesos. "(e) Wholesale dealers in fermented liquors, except basi, tuba and tapuy, four hundred pesos. "(f) Wholesale peddlers of distilled spirits, four hundred pesos. "(g) Wholesale peddlers of fermented liquors, four hundred pesos. "(h) Retail liquor dealers: "1. In cabarets, day and night clubs, race tracks, cockpits, Jai-Alai, casinos and other similar places, one thousand pesos; "2. In restaurants, beer gardens, pubs and cocktail lounges, eight hundred pesos; "3. In retail establishment and other places, three hundred pesos. "(i) Retail vino dealers, fifty pesos. "(j) Retail dealers in fermented liquor: "1. In cabarets, day and night clubs, race tracks, Jai-Alai, casinos and other similar places, eight hundred pesos; "2. In restaurants, cockpits, beer garden, pubs and cocktail lounges, five hundred pesos; "3. In retail establishment and other places, one hundred pesos. "(k) Retail peddlers of distilled spirits, wine and fermented liquors, one hundred pesos. "(l) Wholesale leaf tobacco dealers, six hundred pesos; owners/proprietors of leaf tobacco redrying plants, one thousand pesos; strippers of leaf tobacco, six hundred pesos. "(m) Wholesale dealers of cigars, cigarettes and other manufactured tobacco products, five hundred pesos. "(n) Wholesale peddlers of manufactured tobacco products, two hundred pesos. "(o) Retail leaf tobacco dealers, fifty pesos. "(p) Retail dealers of cigars, cigarettes and other manufactured tobacco products, fifty pesos. "(q) Retail peddlers of cigars, cigarettes and other manufactured tobacco products, thirty pesos. "(r) Manufacturers, importers or exporters of cigars, cigarettes and other manufactured tobacco products "1. In the cities of Manila, Quezon, Pasay and Caloocan and in the Province of Rizal, three thousand pesos; "2. In any other place, one thousand pesos. "(s) Importers or exporters of leaf tobacco, scrap tobacco and other partially manufactured tobacco products, two thousand pesos. "(t) Manufacturers or importers of cigarette paper in bobbins or rolls, cigarette tipping papers or cigarette filter tips, two thousand pesos. "(u) Manufacturers or importers of playing cards, saccharine or sodium saccharinate or any of its other derivatives and salts and other artificial sweetening agents, lighter fluid in liquid or gaseous form, matches, fireworks, denatured alcohol for motive power, one thousand pesos. "(v) Manufacturers, importers or exporters of petroleum or other manufactured oils and fuels from petroleum, five thousand pesos. "(w) Manufacturers, producers, or importers of soft drinks or mineral waters, one thousand pesos. "(x) Wholesale dealers of soft drinks, or other mineral waters, two hundred pesos. "(y) Wholesale peddlers of soft drinks or other mineral waters, two hundred pesos. "(z) Dealers in securities, three hundred pesos. "(aa) Real estate dealers, one hundred fifty pesos, if the annual income from buying, selling, exchanging, leasing, or renting property (whether on their own account as principals or as owners of rental property or properties) does not exceed four thousand pesos; "Three hundred pesos, if the annual income exceeds four thousand pesos but does not exceed ten thousand pesos; "Five hundred pesos, if the annual income exceeds ten thousand pesos but does not exceed thirty thousand pesos; "One thousand pesos, if the annual income exceeds thirty thousand pesos but does not exceed fifty thousand pesos; "Two thousand pesos, if the annual income exceeds fifty thousand pesos but does not exceed seventy thousand pesos; "Three thousand pesos, if the annual income exceeds seventy thousand pesos. "The initial real estate dealer's fixed tax to be paid by the person first engaging in business subject to the said tax shall be one hundred fifty pesos. "(bb) Stock brokers, real estate brokers, commercial brokers, customs brokers and immigration brokers, one thousand pesos. "(cc) Owners of race tracks for each day on which races are run on any track, one thousand pesos; owners and operators of off-track establishments for each day on which races are run on any track, fifty pesos. "(dd) Lending investors "1. In chartered cities and first class municipalities, one thousand pesos. "2. In second and third class municipalities, five hundred pesos; "3. In fourth and fifth class municipalities and municipal districts, two hundred fifty pesos: Provided , That lending investors who do business as such in more than one province shall pay a tax of one thousand pesos. "(ee) Cinematographic film owners, lessors or distributors, five hundred pesos. "(ff) Pawnshops, one thousand pesos. "(gg) Banks, insurance companies, finance and investment companies doing business in the Philippines and franchise grantees, two thousand pesos. "(hh) Operators, proprietors or lessees of theaters and cinema house: first run, one thousand pesos; second run, five hundred pesos. "(ii) Operators, proprietors or lessees of boxing arenas, swimming pools, bowling alleys and other places of amusement, one hundred and fifty pesos. "(jj) Operators, proprietors or lessees of resorts, skating rinks and golf links, one thousand pesos. "(kk) Night clubs and day clubs, one thousand five hundred pesos. "(ll) Cabarets, one thousand pesos. "(mm) Jai-Alai, for each day on which games are played, five hundred pesos; for each off-fronton, fifty pesos also for each day Jai-Alai is played. "(nn) Operators or owners of rice or corn mills shall be subject to an annual graduated fixed tax based upon total capacity per machine in accordance with the following schedule: "Corn mill, not exceeding one hundred cavanes per twelve hour capacity P30.00 "Corn mill, exceeding one hundred cavanes per twelve hour capacity 45.00 "Kiskisan' type, not exceeding one hundred cavanes of palay per twelve hour capacity 50.00 "Kiskisan' type, exceeding one hundred cavanes of palay per twelve hour capacity 75.00 "Cono', of not exceeding one hundred cavanes of palay per twelve hour capacity 200.00 "Cono', of not exceeding two hundred cavanes of palay per twelve hour capacity 400.00 "Cono', of not exceeding three hundred cavanes of palay per twelve hour capacity 600.00 "Cono', of not exceeding four hundred cavanes of palay per twelve hour capacity 900.00 "Cono', of not exceeding five hundred cavanes of palay per twelve hour capacity 1,300.00 "Cono', of not exceeding six hundred cavanes of palay per twelve hour capacity 1,800.00 "Cono', of not exceeding seven hundred cavanes of palay per twelve hour capacity 2,500.00 "Cono', of not exceeding eight hundred cavanes of palay per twelve hour capacity 3,200.00 "Cono', of not exceeding nine hundred cavanes of palay per twelve hour capacity 4,000.00 "Cono', of not exceeding one thousand cavanes of palay per twelve hour capacity 4,800.00 "Cono', of over one thousand one cavanes of palay per twelve hour capacity 5,600.00 "(oo) Proprietors, operators or lessees of cockpits "1. In chartered cities and municipalities in the Greater Manila Area, three thousand pesos; "2. In first and second class municipalities, two thousand pesos; "3. In third and fourth class municipalities, five hundred pesos; "4. In fifth, sixth and seventh class municipalities, one hundred pesos." "SEC. 23. Section 204 of the National Internal Revenue Code is hereby amended to read as follows: "SEC. 204. Compensating tax . On the commodities, goods, wares, or merchandise brought into the Philippines, there shall be paid by the importer thereof a compensating tax equivalent to the percentage taxes imposed under this title on original transactions effected by importers or manufactures. The compensating tax shall be based on the home consumption value or price as defined in Section 193 (b) of this Code (excluding internal excise taxes in the country of origin) plus ten (10%) percent of such home consumption value or price, including postage, commission, customs duty and all similar charges, except freight and insurance, and such tax shall be paid before the withdrawal or removal of said commodities, goods, wares or merchandise from the customhouse or the post office: Provided , That in the case of imported automobiles, the compensating tax to be paid shall be determined in accordance with the following schedules: "If the total landed cost, as described above does not exceed P35,000, the tax shall be 100% of such landed cost; "If it exceeds P35,000 but does not exceed P40,000, the tax shall be P35,000 plus 125% of the excess over P35,000; "If it exceeds P40,000 but does not exceed P45,000, the tax shall be P41,250 plus 150% of the excess over P40,000; "If it exceeds P45,000 but does not exceed P50,000, the tax shall be P48,750 plus 175% of the excess over P45,000; "If it exceeds P50,000, the tax shall be P57,500 plus 200% of the excess over P50,000. "The following are not subject to compensating tax: "(a) Articles subject to the specific taxes under Title IV of this Code and articles to be used by the importer himself in the manufacture or preparation of articles subject to specific taxes; "(b) Commodities, goods, wares or merchandise purchased or received by merchants, importers and manufacturers who are subject to tax under Sections 194, 195, 196, 197, 198, 199, 201 or 203 of this Title, where such importations are to be sold, resold, bartered or exchanged or are to be used in the manufacture or preparation of articles for sale, barter, or exchange and are to form part thereof; "(c) Articles to be used by the importer himself in the manufacture or preparation of articles for export; "(d) Articles to be used by the importer himself as passenger and/or cargo vessel of more than ten thousand tons, whether coastwise or ocean-going, including engine and spare parts of said vessel; "(e) Articles brought in by resident, including non-resident citizens coming to resettle in the Philippines, and accompanying them upon their return or arriving within ninety days before or after their arrival. "(f) Professional instruments and implements, tools of trade, occupation or employment, wearing apparel, domestic animals, and personal and household effects belonging to persons coming to settle for the first time in the Philippines, for their own use and not for barter, sale or exchange, accompanying such persons, or arriving within ninety days before or after their arrival, upon the production of evidence satisfactory to the Commissioner, that such persons are actually coming to settle in the Philippines, that the articles were brought from their former place of abode, that change of residence is bona fide : Provided , That no vehicle, vessel, aircraft or merchandise of any kind, machinery or other articles for use in manufacture, shall be classified under this sub-section. "The provisions of existing laws to the contrary notwithstanding but without prejudice to Presidential Decree No. 1395, exemption from this tax shall be limited to the following: "1. Those enumerated in this section; "2. Those granted under Republic Act No. 5186, as amended; Republic Act No. 6135, as amended; Republic Act No. 5490; Republic Act No. 4147; Republic Act No. 4501; Public Act No. 4271, as amended by Republic Act No. 2360. "3. Those granted in pursuance of or in compliance with international treaties or commitments, such as the ADB-RP Host Agreement (1966), the 1947 Convention on Privileges and Immunities of the United Nations and its Specialized Agencies; the United States Agency for International Development-RP Agreement; the 1947 Military Bases Agreement; and other similar treaties or commitments; "4. Machineries equipment, tools for production, plants to convert mineral ores into saleable form, spare parts, supplies, materials, accessories, explosives, chemicals, and transportation and communication facilities imported by and for the use of new mines and old mines which resume operations, when certified to as such by the Secretary of Natural Resources upon the recommendation of the Director of Mines, for a period ending five (5) years from the first date of actual commercial production of saleable mineral products: Provided , That such articles are not locally available in reasonable quantity, quality and price and are necessary or incidental in the proper operation of the mine; and aircrafts imported by agro-industrial companies to be used by them in their agricultural and industrial operations or activities, spare parts and accessories thereof; and "5. Those that may be granted by the President upon recommendation of the NEDA in the interest of economic development. "If any article, withdrawn from customhouse or post office without payment of compensating tax, is, within one year from the date of the said withdrawals, used by the importer for other purposes, or should be sold, bartered or exchanged, a written notice of such fact shall be sent to the Commissioner and payment of the corresponding compensating tax or advance sales tax, as the case may be, shall be made by the importer or transferee within ten (10) days from such diversion of use or sale, barter or exchange of the imported article. If the proper tax is not paid within such period, the amount of tax shall be increased by twenty-five per centum , the increment to be a part of the tax and the entire unpaid amount shall be subject to interest at the rate of fourteen per centum per annum . "In any event where the importer becomes liable for advance sales tax, or in any case where an article is imported or brought into the Philippines without payment of either the compensating or advance sales tax, as the case may be, the tax due on such article shall constitute a lien on the article superior to all other charges or liens, irrespective of the possessor thereof. "In the case of tax-free articles brought or imported into the Philippines by persons, entities or agencies, exempt from tax which are subsequently sold, transferred or exchanged in the Philippines to non-exempt persons or entities, the purchasers or recipients shall be considered the importers thereof, and shall be liable for the duty and internal revenue tax due on such importation. The tax due on such article shall constitute a lien on the article itself, superior to all other charges or liens, irrespective of the possessor thereof." "SEC. 24. Items (16) and (17) of Section 205 are hereby amended to read as follows: "(16) Business agents and other independent contractors, including private detective or watchman agencies, except gross receipts of a pioneer enterprise registered with the Board of Investments under Republic Act No. 5186; and "(17) Lessors of personal property, except nonresident owners of property subject to the final tax under Section 24(b)(vii) of this Code." "SEC. 25. The last paragraph of Section 205 is hereby amended to read as follows: "The term 'gross receipts' means all amounts received by the prime or principal contractor as the total contract price, undiminished by amount paid to the sub-contractor under a subcontract arrangement. Any portion of the total contract price which is paid to the subcontractor, shall be excluded from the taxable gross receipts of the subcontractor." "SEC. 26. Section 207 of the National Internal Revenue Code is hereby amended as shown hereunder. The amendment, however, shall become effective only upon order of the President taking into account the authorized rates of transportation fares collectible by common carriers: "SEC. 207. Percentage tax on carriers and keepers of garages . Keepers of garages, cars for rent or hire driven by the lessees, transportation contractors, persons who transport passenger or freight for hire, and common carriers by land, air, or water, except owners of bancas and owners of animal-drawn two-wheeled vehicles, shall pay a tax equivalent to two per centum of their quarterly gross receipts. "In computing the percentage tax provided in this section, the following shall be considered the minimum quarterly gross receipts in each particular case: "Autocalesa "1. Manila and other cities P1,200.00 "2. Provincial 600.00 "Jeepney for hire "1. Manila and other cities P2,400.00 "2. Provincial 1,200.00 "Public utility bus Not exceeding 30 passengers P3,600.00 Exceeding 30 but not exceeding 50 passengers 6,000.00 Exceeding 50 passengers 7,200.00 "Taxis "1. Manila and others cities P3,600.00 "2. Provincial 2,400.00 "Car for hire (with chauffeur) 3,000.00 "Car for hire (without chauffeur) 1,800.00 "SEC. 32. Section 326 of the National Internal Revenue Code is hereby amended by adding a second paragraph thereto to read as follows: "The authority of the Secretary of Finance to determine articles similar or analogous to those subject to a rate of sales tax under a certain category enumerated in Sections 194, 196 and 197 of this Code shall be without prejudice to the power of the Commissioner of Internal Revenue to make rulings or opinions in connection with the implementation of the provisions of internal revenue laws, including rulings on the classification of articles for sales tax and similar purposes." Features of the Amendments The difference in the rates of fixed taxes before and after Presidential Decree No. 1457 may be gleaned from the following schedule: Kind of Fixed Tax Old Rate New Rate Increase Brewers P5,000 P10,000 P5,000 Distillers, depending on annual production in gauge liters: Exceeding Not Exceeding 10,000 P100 P100 P 10,000 100,000 1,000 2,000 1,000 100,000 200,000 2,000 4,000 2,000 200,000 300,000 3,000 6,000 3,000 300,000 500,000 4,000 8,000 4,000 500,000 5,000 10,000 5,000 Rectifiers, compounders, and repackers of wines or distilled spirits P1,000 P2,000 P1,000 Wholesale dealers of distilled spirits Manila P1,000 P2,000 P1,000 Chartered cities other than Manila P600 P1,000 P400 Other places P200 P500 P300 Wholesale dealers in fermented liquors P200 P400 P200 Wholesale peddlers of distilled spirits P200 P400 P200 Wholesale peddlers of fermented liquor P200 P400 P200 Retail liquor dealers Cabarets, day and night clubs, race tracks, cockpits, Jai- alai, casinos and other similar places P200 P1,000 P800 Restaurants, beer gardens, pubs and cocktail lounges P200 P800 P600 Retail establishment and other places P200 P300 P100 Retail vino dealers P20 P50 P30 Retail dealers in fermented liquors: Cabarets, day and night clubs race tracks, Jai- Alai, casinos and other similar places P50 P800 P750 Restaurants, cockpits, beer gardens, pubs and cocktail lounges P50 P500 P450 Retail establishment and other places P50 P100 P50 Retail peddlers of distilled spirits, wines and fermented liquors P50 P100 P50 Wholesale leaf tobacco dealers P400 P600 P200 Owners/proprietors of leaf tobacco redrying plants P P1,000 P1,000 Strippers of leaf tobacco P P600 P600 Wholesale dealers of cigars, cigarettes and other manufactured tobacco products P100 P500 P400 Wholesale peddlers of manu- factured tobacco products P100 P200 P100 Retail leaf tobacco dealers P30 P50 P20 Retail dealers of cigars, cigarettes and other manu- factured tobacco products P20 P50 P30 Retail peddlers of cigars, cigarettes and other manufactured tobacco products P20 P30 P10 Manufacturers, importers of cigars, cigarettes and other manufactured tobacco products Manila, Quezon, Pasay and Caloocan and in the Province of Rizal P1,000 P3,000 P2,000 In any other place P500 P1,000 P500 Importers or exporters of leaf tobacco, scrap tobacco and other partially manufactured tobacco products P1,000 P2,000 P1,000 Manufacturers or importers of cigarette paper in bobbins, or rolls, cigarette tipping papers or filter tips P1,000 P2,000 P1,000 Manufacturers or importers of playing cards, saccharine or sodium saccharinate or any of its other derivatives and salts and other artificial sweetening agents, lighter fluid in liquid form or gaseous form, matches, fireworks, denatured alcohol for motive power P500 P1,000 P500 Manufactures, importers or exporters of petroleum or other manufactured oils and fuels from petroleum P2,000 P5,000 P3,000 Manufacturers, producers, or importers of soft drinks or mineral waters P400 P1,000 P600 Wholesale dealers of softdrinks, other mineral waters P50 P200 P150 Wholesale peddlers of softdrinks or other mineral waters P50 P200 P150 Dealers in securities P150 P300 P150 Real estate dealers, depending upon amount of gross income from rents P150-P1,000 P150-P3,000 P2,000 Brokers P300 P1,000 P700 Owners or proprietors of off-track establishments P P50 P50 Lending investors, depending upon the place P125-P500 P250-P1,000 P125-500 Cinematographic film owners, lessors or distributors P300 P500 P200 Pawnshop P500 P2,000 P1,500 Banks, insurance companies franchise grantees P500 P2,000 P1,500 Theatres, cinemahouses, 1st run. P500 P1,000 P500 2nd run. P200 P500 P300 Boxing arenas, swimming pools, bowling alleys and other places of amusement P100 P150 P50 Resorts, skating rinks and golf links P100 P1,000 P900 Night and day clubs P1,000 P1,500 P500 Cabarets P500 P1,000 P500 Jai-Alai P250 P500 P250 Off-Frontons P P50 P50 Rice and corn mill (no change) Amendment to Section 192 : 1. Graduated Fixed Tax . The amendment consists in providing a tax ceiling for this tax which in no case shall exceed P50,000.00. In computing the amount of sales in excess of ten million pesos, every fractional part of one million pesos in excess of ten million pesos shall be disregarded. 2. Other Fixed Taxes . Aside from the increase in the rate of tax, the following changes were introduced: a. The fixed tax on retail liquor dealers is now based on the kind of place or establishment serving the liquor, to wit: (1) In cabarets, day and night clubs, race tracks, cockpits, Jai-Alai, casinos and other similar places, one thousand pesos; (2) In restaurants, beer gardens, pubs and cocktail lounges, eight hundred pesos; (3) In retail establishment and other places, three hundred pesos. b. Likewise the fixed tax on retail dealers in fermented liquors is now classified as follows: (1) In cabarets, day and night clubs, race tracks, Jai-Alai, casinos and other similar places, eight hundred pesos; (2) In restaurants, cockpits, beer garden, pubs and cocktail lounges, five hundred pesos; (3) In retail establishment and other places, one hundred pesos. c. The following are now required to secure fixed taxes on business: (1) Owners/proprietors of leaf tobacco redrying plants, one thousand pesos; (2) Strippers of leaf tobacco, six hundred pesos; (3) Owners and operators of off-track establishments for each day on which races are run in any track, fifty pesos; (4) Owners, proprietors or lessees of bowling alleys and other places of amusement, one hundred and fifty pesos; (5) For each fronton, fifty pesos for each day Jai-Alai is played. d. The fixed tax on real estate dealers is now as follows: Annual Income Annual Income Exceeding Not Exceeding Tax Due P P4,000 P150.00 4,000 10,000 300.00 10,000 30,000 500.00 30,000 50,000 1,000.00 50,000 70,000 2,000.00 70,000 3,000.00 The initial real estate dealer's fixed tax to be paid by the person first engaging in business subject to the said tax shall be one hundred fifty pesos. Amendment to Section 204 . Compensating Tax . 1. The compensating tax is now based on: a. Home consumption value (excluding internal excise taxes in the country of origin), plus b. Ten (10%) per cent of such home consumption value or price, plus c. Postage, commission, customs duty and all similar charges except freight and insurance. 2. There is now provided the rates of compensating tax due on imported automobiles, to wit: Landed Cost Landed Cost Not Rate of Cumulative Exceeding Exceeding Bracket Tax Tax Due Amount of Tax Due P35,000 P35,000 100% P35,000 P35,000 P35,000 40,000 5,000 125% 6,250 41,250 40,000 45,000 5,000 150% 7,500 48,750 45,000 50,000 5,000 175% 8,750 57,500 50,000 57,500 plus 200% of the excess over P50,000 3. The amendment fixes a period of one year from the date of withdrawal within which, an importer who withdrew an article from the customhouse or post office without paying the compensating tax is made liable to pay the compensating or advance sales tax as the case may be if: a. The imported article was used for purposes other than that for which it was released free from tax, or b. Such imported article was sold, bartered or exchanged. The corresponding compensating or advance sales tax should be paid by the importer or transferee within ten (10) days from such diversion of use or sale, barter or exchange. Amendment to Section 205 Contractor ' s tax . 1. The following are now subject to the 3% contractor's tax: a. Private detective or watchman agencies; b. Persons, associations and corporations under contract for embroidery and apparel export, as well as their agents and contractors; c. Gross receipts from a pioneer enterprise registered with the Board of Investments under the provisions of Republic Act 5186. 2. Non-resident lessors of property who are subject to the final tax under Section 24(b)(vii) of the Tax Code are no longer subject to the tax prescribed under this section. 3. The term "gross receipts" was re-defined to mean all amounts received by the prime or principal contractor as the total contract price, undiminished by amount paid to the sub-contractor under a sub-contract arrangement. Any portion of the total contract price paid to the sub-contractor shall be excluded from the taxable gross receipts of the sub-contractor. Amendment to Section 207 . Percentage tax on common carriers and keepers of garages . 1. The percentage tax on keepers of garages, cars for rent or hire driven by the lessees, transportation contractors, persons who transport passenger or freight for hire, and common carriers by land, air or water, except owners of bancas and owners of animal-drawn two-wheeled vehicles is now based on their gross receipts per quarter instead of per month. 2. In the case of common carriers by land the minimum quarterly gross receipts were revised and the increase in the base of the tax is shown in the following schedule: Minimum Quarterly Minimum Quarterly Receipts Prior to Receipts under Carrier P.D. 1358 P.D. 1358 Increase Autocalesa Manila and other cities P600 P1,200 P600 Provincial 300 600 300 Jeepney for Hire Manila and other cities P1,200 P2,400 P1,200 Provincial 600 1,200 600 Public Utility Bus (not exceeding 30 passengers) P1,800 P3,600 P1,800 (31 to 50 passengers) 3,000 6,000 3,000 (More than 50 passenger 3,600 7,200 3,600 Taxis Manila and other cities P1,800 P3,600 P1,800 Provincial 1,200 2,400 1,200 Car for Hire With chauffeur P1,500 P3,000 P1,500 Without chauffeur 900 1,800 900 3. The amendments to Section 207, however, shall become effective only upon order of the President taking into account the authorized rates of transportation fares collectible by common carriers. Amendment to Section 326 . Authority of Secretary of Finance to promulgate rules and regulations : The authority of the Secretary of Finance to classify articles as similar or analogous to those enumerated in Sections 194, 196 and 197 and thus be subject to the rates of tax prescribed therein, notwithstanding, the Commissioner of Internal Revenue is not precluded from issuing rulings or opinions in connection with the implementation of the provisions of internal revenue laws, including rulings in the classification of articles from sales tax and similar purposes. Paragraph (d) of Section 8 of Republic Act No. 5487 and all other laws, regulations and parts thereof inconsistent with the provisions of P.D. 1457 were repealed. Presidential Decree No. 1457 took effect on June 11, 1978 except those mentioned in Revenue Memorandum Circular No. 85-78 dated October 27, 1978. All internal revenue officers and others concerned are hereby enjoined to be guided accordingly and to give this circular as wide a publicity as possible. aisa dc EFREN I. PLANA Acting Commissioner