Publishing Letter of Instructions No. 753 dated October 14, 1978 and Revenue Memorandum Order No. 29-78 dated October 16, 1978

November 17, 1978 REVENUE MEMORANDUM CIRCULAR NO. 091-78 SUBJECT : Publishing Letter of Instructions No. 753 dated October 14, 1978 and Revenue Memorandum Order No. 29-78 dated October 16, 1978 TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, there are published hereunder the full texts of Letter of Instructions No. 753 and Revenue Memorandum Order No. 29-78: "MALACAANG MANILA "LETTER OF INSTRUCTIONS 753 TO : The Minister, Ministry of Finance The Minister, Ministry of Agriculture The Commissioner, Bureau of Internal Revenue "Earlier, I had directed that marginal farmers be exempted from the 1% tax on gross sales, with a minimum of P100, which was levied under Presidential Decree No. 1358. I also directed the Ministry of Agriculture to give me recommendations on the definition of marginal farmers. "It has been reported to me by the Batasan Pambansa Committee on Agriculture, however, that the 1% tax is already being enforced on all farmers even before the definition of marginal farmers has been arrived at so that this group may be exempted. "Until the definition of a marginal farmer is drawn up and approved by me, I hereby direct the Minister of Finance and the Commissioner of the Bureau of Internal Revenue to temporarily suspend the imposition on small farmers of the 1% percentage tax under Section 198, on sales of agricultural products under Presidential Decree No. 1358, entitled "Further Amending Certain Sections of Title V of the National Internal Revenue Code, As Amended." Furthermore, the minimum tax of P100 also being implemented under this Section is also hereby temporarily suspended. "The Minister of Agriculture, in consultations with the Minister of Finance and the Commissioner of the Bureau of Internal Revenue, is hereby directed to submit within 30 days for Presidential approval the definition of a small marginal farmer for exemption from the said percentage tax. (SGD.) FERDINAND E. MARCOS President Republic of the Philippines "October 14, 1978" "REVENUE MEMORANDUM ORDER NO. 29-78 "SUBJECT : Presidential Directives Regarding the Imposition of Fixed and Percentage Taxes on Marginal Farmers "TO : All Regional Directors, Chiefs of Investigating Divisions, Revenue District Officers, and Others Concerned "With the enactment of Presidential Decree No. 1358 imposing a 1% sales tax on agricultural products, farmers automatically became subject to the payment of the fixed annual privilege tax of P100 which is imposed upon anyone engaged in business subject to percentage tax. "On July 26, 1978, the President issued a directive exempting marginal farmers from the payment of the P100 privilege tax. Last October 14, the Presidential also suspended the imposition of the 1% sales tax on all agricultural products sold by marginal farmers. It is expected that a Letter of Instructions will soon be issued by the President defining "marginal farmers". In the meantime, however, the above Presidential directives must be given effect in keeping with the benign motives which inspired their issuance. "All internal revenue officers are therefore enjoined to comply with the foregoing directives in conformity with the following guidelines: a. "Marginal farmers" refers to small, subsistence farmers. It certainly does not cover the affluent ones and those who are engaged in large-scale farming. b. The said Presidential directives shall be liberally construed in line with their beneficent objectives. All reasonable doubts as to whether a farmer is marginal or not should be resolved in favor of the taxpayer. c. Farming is not strictly limited to land cultivation. It includes salt-making and fishing, among others. d. The exemption extends only to the payment of the P100 privilege tax under Section 192(1) and the 1% sales tax on agricultural products under Section 198 of the Tax Code as amended by Presidential Decree No. 1358. It does not cover other taxes such as incomes tax. e. The suspension is prospective in character and does not affect privilege and sales taxed already collected. "This Order should be given the widest possible dissemination for the information and guidance of all concerned. "Immediate compliance herewith is required. (SGD.) EFREN I. PLANA Acting Commissioner "October 16, 1978" All Internal revenue officer and others concerned with the enforcement of internal revenue laws are hereby enjoined to be guided accordingly and to give the Letter of Instructions and Revenue Memorandum Order as wide a publicity as possible. aisa dc EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8