Publishing Republic Act No. 6110, Amending Among Others Sections 250, 255, 259, 260, 260-A, 262 and 265 and inserting Section 249-A between Sections 249 and 250, all of Title VIII — Miscellaneous Taxes, National Internal Revenue Code

February 12, 1970 REVENUE MEMORANDUM CIRCULAR NO. 11-70 SUBJECT : Publishing Republic Act No. 6110, Amending Among Others Sections 250, 255, 259, 260, 260-A, 262 and 265 and inserting Section 249-A between Sections 249 and 250, all of Title VIII Miscellaneous Taxes, National Internal Revenue Code TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, there is quoted hereunder the pertinent sections of Republic Act No. 6110, amending certain sections of Title VIII of the National Internal Revenue Code, as amended, relating to miscellaneous taxes, viz.: " Republic Act No . 6110 " An Act Amending Certain Provisions of the National Internal Revenue Code , as Amended " Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled : xxx xxx xxx "SEC. 50. A new section is hereby inserted between Sections two hundred and forty-nine and two hundred and fifty of the same Act, to be known as Section two hundred and forty-nine-A which shall read as follows: "SEC. 249-A. Tax on finance companies . There shall be collected a tax of one per centum on the gross receipts derived by all finance companies doing business in the Philippines from interests, discounts, and all other items treated as gross income under this Code. "As used in this section 'finance companies' refers to corporations or partnerships other than a bank, or insurance company, primarily organized for the purpose of extending credit facilities to consumers and to industrial, commercial or agricultural enterprises whether by granting direct loans or by discounting or factoring commercial papers or accounts receivables for profit, buying and selling contracts, leases, chattel mortgages and other evidences of indebtedness arising out of one or more of the steps in the distribution and sale of commodities." "SEC. 51. Section two hundred and fifty of the same Act is hereby amended to read as follows: "SEC. 250. Times for Payment of Tax . Increase of Tax in Case of Delinquency . The tax imposed in Sections two hundred and forty-nine and two hundred and forty-nine-A shall be payable at the end of each calendar quarter and it shall be the duty of every bank or finance company, within twenty days after the end of each calendar quarter, to make a true and complete return of the amount of gross income derived during the preceding calendar quarter and pay the tax due thereon and if the tax is not paid within the time prescribed herein, the amount of the tax shall be increased by twenty-five per centum , the increment to be a part of the tax." "SEC. 52. Section two hundred and fifty-five of the same Act is hereby amended to read as follows: "SEC. 255. Taxes on insurance premiums . There shall be collected from every person, company, or corporation (except purely cooperative companies or associations) doing insurance business of any sort in the Philippines a tax of three per centum of the total premiums collected, whether such premiums are paid in money, notes, credits, or any substitute for money; but premiums refunded within six months after payment on account of rejection of risk or returned for other reason to a person insured shall not be included in the taxable receipts; nor shall any tax be paid upon re-insurance by a company that has already paid the tax; nor upon premiums collected or received by any branch of a domestic corporation, firm or association doing business outside the Philippines on account of any life insurance of the insured who is a non-resident, if any percentage tax on such premiums is imposed by the foreign country where the branch is established nor upon premiums collected or received on account of any re-insurance, if the risk insured against covers property located outside the Philippines, or the insured, in case of personal insurance, resides outside the Philippines, if any percentage tax on such premiums is imposed by the foreign country where the original insurance has been issued or perfected. "Cooperative companies or associations are such as are conducted by the members thereof with the money collected from among themselves and solely for their own protection and not for profit." "SEC. 53. Section two hundred and fifty-nine of the same Act is hereby amended to read as follows: "SEC. 259. Tax on franchises . There shall be collected in respect to all franchises, upon the gross receipts from the business covered by the law granting the franchise, a tax of five per centum or such taxes, charges, and percentages as are specified in the special charters of the grantees upon whom such franchises are conferred, whichever is higher, unless the provisions thereof preclude the imposition of a higher tax. For the purpose of facilitating the assessment of this tax, reports shall be made by the respective holders of the franchises in such form and at such times, as shall be required by the regulations of the Department of Finance. "The taxes, charges, and percentages on franchises, shall be assessed, collected by and paid to the Commissioner of Internal Revenue or any of his collection agents, any provision in the franchise to the contrary notwithstanding, and shall be due and payable as specified in the particular franchise, or, in case no time limit is specified therein, the provisions of Section one hundred eighty-three shall apply; and if such taxes, charges, and percentages remain unpaid on the date on which they must be paid, twenty-five per centum shall be added to the amount of such taxes, charges, and percentages, which increase shall form part of the tax." "SEC. 54. Section two hundred and sixty of the same Act is hereby amended to read as follows: "SEC. 260. Amusement taxes . There shall be collected from the proprietor, lessee, or operator of theaters, cinematographs, concert halls, circuses and other places of amusement the following rates: "(a) When the amount paid for admission is one peso or less, twenty percent; "(b) When the amount paid for admission exceeds one peso, thirty percent. In the case of boxing exhibitions, there shall be collected from the proprietor, lessee, or operator an amusement tax at a rate equivalent to fifty per centum of the taxes prescribed in the preceding paragraph: Provided , That no local government shall impose any tax in excess of five per centum : Provided , further , That all laws and ordinances in contravention hereto are repealed. "In the case of theaters or cinematographs, the taxes herein prescribed shall first be deducted and withheld by the proprietors, lessees, or operators of the theaters or cinematographs and paid to the Commissioner of Internal Revenue before the gross receipts are divided between the proprietors, lessees, or operators of the theaters or cinematographs and the distributors of the cinematographic films. "In the case of cabarets, day and night clubs, and race tracks, there shall be collected from the proprietor, lessee, or operator a tax equivalent to twenty per centum and in the case of cockpits, ten per centum of their gross receipts, irrespective of whether or not any amount is charged or paid for admission: Provided , however , That in the case of race tracks, the tax is in addition to the privilege tax prescribed in Section one hundred eighty-two-A 3(cc). For the purpose of amusement tax, the term gross receipts: embraces all the receipts of the proprietor, lessee or operator of the amusement place. "The holding of operas, concerts, recitals, dramas, painting and art exhibitions, flower shows, musical programs, circuses, literary and oratorical presentations, except film exhibitions and radio or photographic records thereof, shall be exempt from the payment of the taxes imposed in this section. "The taxes imposed herein shall be payable at the end of each month and it shall be the duty of the proprietor, lessee, or operator concerned, within twenty days after the end of each month, to make a true and complete return of the amount of gross receipts derived during the preceding month and pay the tax due thereon. If the tax is not paid within the time prescribed above, the amount of the tax shall be increased by twenty-five per centum , the increment to be part of the tax. "In case of willful neglect to file the return within the period prescribed herein, or in case a false or fraudulent return is willfully made, there shall be added to the tax or to the deficiency tax, in case any payment has been made, on the basis of the return before the discovery of the falsity or fraud, a surcharge of fifty per centum of its amount. The amount so added to any tax shall be collected at the same time and in the same manner and as part of the tax unless the tax has been paid before the discovery of the falsity or fraud, in which case the amount so assessed shall be collected in the same manner the tax." "SEC. 55. Section two hundred and sixty-A of the same Act is hereby amended to read as follows: "SEC. 260-A. Tax on winnings . Every person who wins in horse races or jai-alai shall pay a tax equivalent to five per cent of his winnings or 'dividends' the tax to be based on the actual amount paid to him for every winning ticket after deducting the cost of the ticket. The tax herein prescribed shall be deducted from the "dividends" corresponding to each winning ticket and withheld by the operator, manager, or person in charge of the horse races or jai-alai before paying the 'dividends' to the person entitled thereto. The same tax shall be collected from owners of winning race horses at the same time and in the same manner above. "The operator, manager, or person in charge of horse races or jai-alai shall, within twenty days from the date the tax was deducted and withheld in accordance with the first paragraph hereof, file a true and correct return with the Commissioner of Internal Revenue in the manner or form to be prescribed by the Secretary of Finance, and pay within the same period the total amount of tax so deducted and withheld. "If the tax herein provided is not paid within the time prescribed above, or in case of willful neglect to file the return within the period prescribed herein, or in case a false or fraudulent return is willfully made, there shall be added to the tax or to the deficiency tax, in case any payment has been made on the basis of the return before the discovery of the falsity or fraud, the corresponding surcharges provided in Section two hundred and sixty of this Code." "SEC. 56. Section two hundred and sixty two of the same Act is hereby amended to read as follows: "SEC. 262. Measuring of forest products and invoicing and collection of charges thereon . The duties incident to the measuring of forest products shall be discharged by the Bureau of Forestry, under regulation of Department of Agriculture and Natural Resources. The invoicing and collection of the charges thereon shall be done by the Bureau of Internal Revenue under regulations approved by the Secretary of Finance." "SEC. 57. Section two hundred and sixty-five of the same Act is hereby amended to read as follows: "SEC. 265. Charges on firewood cut in the public forest . On firewood cut in public forests and forest reserves, the following charges shall be collected: "On bacauan, langaray, pototan, and tangal, per cubic meter, sixty centavos. "On other woods, per cubic meter, thirty centavos. "Only third or fourth-group wood can be taken for firewood. However, at the discretion of the Director of Forestry, first and second-group woods may be removed for firewood purposes from land which is more valuable for agricultural than for forest purposes." xxx xxx xxx "SEC. 68. Effectivity clause . This Act shall take effect on September 1, 1969: Provided , That where at the time of death or within six months thereafter no schedule of values as provided in Section 19 of this Act has been fixed in the areas where the properties of the decedent are located, the assessed values as shown in the tax rolls shall be considered as the fair market values, unless the contrary is shown: Provided , further , That the provisions of Sections 6, 11, 12, 13, 14, 15, and 16 of this Act shall apply to the entire taxable year in which this Act is approved: Provided , still further , That the provisions of Sections 76 and 77 of this Act shall be effective on July 1, 1970: Provided , finally , That the second paragraph of Section 358 as amended by this Act, shall be effective only for a period of four years from July 1, 1969 unless extended. "Approved: August 4, 1969 . . ." FEATURES OF THE AMENDMENTS 1. SEC. 249-A. Tax on finance companies . This is a new provision imposing a tax of 1% on gross receipts of all finance companies as defined in this section, doing business in the Philippines derived from interests, discounts, and all other items treated as gross income under this Code. 2. SEC. 250. Times for payment of Tax Increase of Tax in Case of Delinquency . As in the case of banks (Sec. 249), finance companies (taxable under Sec. 249-A) are required to make a true and complete return of the amount of gross income and pay the corresponding taxes due within twenty days after the end of each calendar quarter. If not paid within this period the tax shall be increased by 25%, and paid as part of the tax. 3. SEC. 255. Taxes on insurance companies . Premiums collected or received by any branch of a domestic corporation, firm or association doing business outside the Philippines on account of any re-insurance shall not be included in the taxable receipts and therefore exempt from tax if the risk insured against covers property located outside the Philippines, or the insured, in the case of personal insurance, resides outside the Philippines, and that any percentage tax on such premiums is imposed by the foreign country where the original insurance has been issued or perfected. The provisos (under the old law) exempting domestic insurance companies suffering impairment of capital, and that referring to domestic insurance companies organized after the passage of the prior amendatory provisions were deleted in the present amendment and, therefore, are now treated and subject to tax in the same manner as other insurance companies. 4. SEC. 259. Tax on franchises . (1) The assessment and collection of taxes, charges, and percentages on franchises is now lodged exclusively and payable to the Commissioner of Internal Revenue or any of his collection agents, any provision in the franchise to the contrary notwithstanding. (2) The franchise tax shall be due and payable as specified in the particular franchise, or, in case no time limit is specified therein, it shall be the duty of the grantee to make a true and complete return of the amount of his monthly gross receipts from the business covered by the franchise within twenty days after the end of each month and pay the tax due thereon, provided that if the grantee is retiring from such business, he shall notify the nearest internal revenue officer thereof, file his return or declaration; and pay the tax due thereon within twenty days after the closing of his business. (Section 183 of the Tax Code). (3) If such taxes, charges, and percentages are not paid on the date they must be paid, the grantee shall pay a surcharge of 25% of such taxes, charges and percentages. 5. SEC. 260. Amusement taxes . (a) Amusement taxes collectible from the proprietor, lessee, or operator of theaters, cinematographs, concert halls, and other places of amusements are now on a percentage basis; 20% when the amount paid for admission is P1.00 or less; and 30% when the amount paid for admission is in excess of P1.00. Accordingly, any single paid admission to these amusement places, irrespective of the amount, is now taxable. For the purpose of determining the rates of amusement tax either at 20% or 30%, as the base may be, the following rules shall be applied: (1) If the amount of the taxes (including municipal or city tax, if imposed) are indicated on the face of the admission ticket, the basis of the tax is the price or amount paid for admission exclusive of the tax. Thus, if the price paid for admission is P1.00 (excluding municipal tax of P0.05 and national tax of P0.20 indicated on the face of the ticket) the taxable amount paid for admission is P1.00, and the tax at the rate of 20% is P0.20; (2) If the amount of the taxes (national, city or municipal) are not indicated on the face of the admission ticket, the price or amount paid for admission shall not be deemed to include the amount of such tax or taxes, and therefore, such price or amount paid for the ticket, shall be the basis for the purpose of applying the corresponding rate at 20% or 30%, as the case may be. Thus, if the amount paid for admission is P1.20, without indicating on the face of admission ticket any amount corresponding to the amusement tax or taxes, the total amount of P1.20 shall be subject to tax at the rate of 30%, or P0.36. (b) The rate of tax for cabarets, night and day clubs has been increased from 10% to 20%. As in the old law, race tracks are still subject at the rate of 20% and cockpits at the rate of 10%. In all of these cases, the tax is due irrespective of whether or not any amount is charged or paid for admission. (c) The exemption from amusement tax provided for in R.A. No. 722, has been incorporated in this Section. (d) The amusement taxes imposed under this Section is now payable within 20 days after the end of each month (within 10 days in the old law). 6. SEC. 260-A. Tax on winnings . The amendment to this section are as follows: (a) Increased tax on winnings or "dividends" in horse races or Jai-alai, from 2-% to 5%; (b) Owners of winning race horses are now subject to 5% tax to be collected at the same time and in the same manner as winners in the races or Jai-alai. (c) The filing of returns and payment of the tax on winnings is required to be made within twenty (20) days [instead of ten (10) days under the old law] from the date the tax was deducted and withheld by the operator, manager, or person in-charge of horse races or Jai-alai. 7. SEC. 262. Measuring of forest product and invoicing and collection of charges thereon . As amended this Section provides that: (a) The discharge of the duties incident to measuring of forest products is now lodged exclusively with the Bureau of Forestry under regulations of the Department of Agriculture and Natural Resources. Prior to the amendment, this duty was discharged by the Bureau of Internal Revenue under regulations of the Department of Finance, although the Commissioner is authorized to deputize employees of the Bureau of Forestry to perform the duties incident not only to the measuring but also invoicing of forest products when the Director of Forestry deems such course advisable for the protection of the forest products and is willing to supply the services of such employees at the expense of the Bureau of Forestry. (b) Under the present law, as herein amended, the invoicing of forest products and collection of the charges thereon shall be exclusively by the Bureau of Internal Revenue under regulations approved by the Secretary of Finance. The Commissioner is not now authorized to deputize employees of the Forestry or to discharge duties incident to invoicing and collection. 8. SEC. 265. Charges on firewood cut in public forest . The amendment to this section increases the rates as follows: (a) On bacauan, langaray, pototan and tangal, from P0.40 (old rate) to P0.60 per cubic meter, and (b) On other woods, from P0.20 (old rate) to P0.30. Effectivity Pursuant to Section 80 of the Act, the amendments to the sections of Title VIII of the Tax Code as indicated herein took effect on September 1, 1969. Enforcement 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. MISAEL P. VERA Commissioner of Internal Revenue APPROVED: CESAR VIRATA Acting Secretary of Finance