Publishing Sections 203 to 209, Inclusive of the National Internal Revenue Code of 1977, as Amended by Presidential Decree No. 1959, Increasing the Percentage Tax Rates on Services Rendered by Millers, Contractors, Carriers, Brokers and Others

October 15, 1984 REVENUE MEMORANDUM CIRCULAR NO. 28-84 SUBJECT : Publishing Sections 203 to 209, Inclusive of the National Internal Revenue Code of 1977, as Amended by Presidential Decree No. 1959, Increasing the Percentage Tax Rates on Services Rendered by Millers, Contractors, Carriers, Brokers and Others TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, published hereunder is the full text of the amendments to Sections 203 to 209, inclusive, of the National Internal Revenue Code of 1977, as amended by PD 1959. SECTION 12. Section 203 of this Code, as amended, is hereby further amended to read as follows: "Sec. 203. Percentage tax upon proprietors or operators of rope factories, sugar centrals and mills, coconut oil mills, cassava mills, and desiccated coconut, factories . Proprietors or operators of rope factories, sugar centrals and mills, coconut oil mills, cassava mills, and desiccated coconut factories, shall pay a tax equivalent to three (3%) per centum of the gross value in money of all the rope, sugar, coconut oil, cassava flour or starch, desiccated coconut, manufactured, processed or milled by them, including the by-product of the raw materials from which said articles are produced, processed, or manufactured, such tax to be based on the actual selling price or market value of these articles at the time they leave the factory or mill warehouse: Provided, however , That this tax shall not apply to rope, coconut oil, and the by-product of copra from which it is produced or manufactured, and desiccated coconuts, if such rope, coconut oil, copra by-products and desiccated coconuts, shall be removed for exportation and are actually exported without returning to the Philippines, whether so exported in their original state, or as an ingredient or part of any manufactured article or product. cd i In case the raw materials are processed, manufactured or milled in pursuance of a contract where the factory, central, or mill receives a share of the finished products, the tax on the share pertaining to the planter or owner and withheld by the proprietor or operator of the factory, central, or mill and paid by him to the Commissioner. A proprietor or operator of a refined sugar factory shall be subject to the tax imposed by this section but any percentage tax paid under this section on the raw sugar shall be credited against the tax due on the refined sugar. Where articles are manufactured out of materials subject to tax under this section, the percentage tax paid herein shall be credited against the sales tax due on the finished product. SECTION 13. Section 205 of this Code, as amended, is hereby further amended to read as follows: acd "Sec. 205. Contractors, proprietors, or operators of dockyards, and others. A contractor's tax of four (4%) per centum of the gross receipts is hereby imposed on the following: (1) General engineering, general building, and specially contractors as defined in Republic Act Number 4566; (2) Filing, demolition and salvage work contractors, and proprietors or operators of mine drilling apparatus; (3) Proprietors or operators of dockyards; (4) Persons engaged in the installation of water systems and gas or electric light, heat, power; (5) Proprietors or operators of smelting plants, engraving plants, plating establishments, and plastic lamination establishments; (6) Proprietors or operators of establishments for upholstering, washing or greasing of motor vehicles, vulcanizing, recapping and battery charging; (7) Proprietors or operators of establishments for planing or surfacing and recutting of lumber, and sawmills under contract to saw or cut logs belonging to others; (8) Proprietors or operators of dry-cleaning or dyeing establishments, steam laundries, and laundries using washing machines; (9) Proprietors or owners of shops for the repair of any kind of bicycles, mechanical and electrical devices, instruments, apparatus or furniture and shoe repairing by machine or any mechanical contrivance; (10) Proprietors or operators of establishments or lots for parking purposes; (11) Proprietors or operators of tailor shops, dress shops, milliners and hatters, beauty parlors, barbershops, massage clinics, sauna turkish, and swedish baths, slendering and body building saloons and similar establishments, photographic studio, and funeral parlors; (12) Proprietors or operators of hotels, motels and lodging houses; (13) Proprietors or operators of arrastre and stevedoring, warehousing, or forwarding establishments; (14) Registered master plumbers, smiths, and house or sigh painters; (15) Printers, bookbinders, lithographers and publishers except those engaged in the publication or printing and publication of any newspaper, magazine, review or bulletin which appears at regular intervals, with fixed prices for subscription and sale and which is not devoted principally to the publication of advertisements; casia (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 PD 1789, as amended by BP 391; (17) Lessors of personal property, except non-resident owners of property subject to the final tax under Section 24(b) (viii) of this Code. The term "independent contractors" includes persons (juridical or natural) not enumerated above (but not including individuals subject to the occupation tax under Section 12 of the Local Tax Code) whose activity consists essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractors or their employees. The term "independent contractor" shall not include regional or area headquarters established in the Philippines by multinational corporations, including their alien executives, and which headquarters do not earn or derive income from the Philippines and which act as supervisory, communications and coordinating centers for their affiliates, subsidiaries or branches in the Asia-Pacific Region. The term "gross receipts" means all amounts received by the prime or principal contractor as the total contract price, undiminished by any amount paid to the sub-contractor under a sub-contract arrangement. Any portion of the total contract price which is paid to the sub-contractor, shall be excluded from the taxable gross receipts of the sub-contractor. SECTION 14. Section 205-A of this Code, as amended, is hereby further amended to read as follows: "Sec. 205-A. Percentage tax on hotels, motels and others . There is hereby imposed on proprietors, operators or keepers of hotels, motels, resthouses, pension houses, lodging houses and resorts, a tax equivalent to twelve (12%) per centum of their gross receipts derived from room occupancy: Provided , That the foregoing tax shall be in lieu of the contractor's and the documentary stamp tax under Sections 205(12) and 238(b) of the National Internal Revenue Code of 1977, respectively." SECTION 15. Section 206 of this Code, as amended, is hereby further amended to read as follows: acd "Sec. 206. Caterers. A caterer's tax is hereby imposed as follows: (1) On proprietors or operators of restaurants, refreshment parlors, and other eating places, including clubs and caterers, four (4%) per centum of their gross receipts. (2) On proprietors or operators of restaurants, bars, cafes and other eating places, including clubs where distilled spirits, fermented liquors in wines are served, four (4%) per centum of their gross receipts from the sale of food or refreshments and eight (8%) per centum of their gross receipts from sale of distilled spirits, fermented liquors or wines. Two sets of commercial invoices or receipts serially numbered in duplicate shall be separately prepared and issued, one for each sale of food or refreshment served and another for each sale of distilled spirits, fermented liquors or wines served, the originals of the invoices or receipts to be issued to the purchaser or customer; (3) On proprietors or operators of restaurants, refreshment parlors, bars, cafes, and other eating places which are maintained within the premises or compound of a cockpit, cabaret, night or day club, Jai-Alai, race track, or which are accessible to patrons of such cockpit, cabaret, night or day club, Jai-Alai, race track by means of a connecting door or passage, twelve (12%) per centum in the case of night or day club, and twenty-five (25%) per centum in the case of Jai-Alai and race track, of their gross receipts. Where the establishments enumerated above are operated or maintained by clubs of any kind or nature (irrespective of the disposition of their net income and whether or not they cater exclusively to members of their guests), the keepers of the establishments shall pay the corresponding tax at the rates fixed above . casia SECTION 16. Section 207 of this Code, as amended, is hereby further amended to read as follows: "Sec. 207. Percentage tax on carriers and keepers of garages. - Keepers of garages, cars for rent or hire driven by the lessee, transportation contractors, persons who transport passenger or freight for hire, and common carriers by land, air water, except owners of bancas and owners of animal-drawn two wheeled vehicles, shall pay a tax equivalent to three (3%) 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 2,400.00 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 other 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 SECTION 17. Section 208 of this Code, as amended, is hereby further amended to read as follows: aisa dc "Sec. 208. Percentage tax on stock, real estate, commercial, customs and immigration brokers and cinematographic film owners, lessors, or distributors. Stock, real estate, commercial, customs, and immigration brokers shall pay a percentage tax equivalent to seven (7%) per centum of the gross compensation received by them. Cinematographic film owners, lessors, or distributors shall pay a percentage tax of three (3%) per centum of their gross receipts. The records kept by said brokers and cinematographic film owners, lessors or distributors may be used as evidence to determine the amount of percentage tax due from them, and the Commissioner may assess and collect the tax due on the compensation or gross receipts earned in accordance with said records. In any case the amount of the compensation or gross monthly receipts of said brokers and cinematographic film owners, lessors, or distributors shall be declared for taxation within the time established for the other monthly sales or receipts. SECTION 18. Section 209 of this Code, as amended, as hereby further amended to read as follows : acd "Sec. 209. Percentage tax on dealers in securities; lending investors. Dealers in securities and lending investors shall pay a tax equivalent to six (6%) per centum of their gross income. Salient Features of the Amendments The amendatory sections have increased the tax rates on services. The changes in rates may be seen from the tabular presentation given below : Tax Subject Brief Descriptions Change in Tax Rate - Increase in percentage tax on the following: Sec. 203 (Millers) 1. Proprietors or operators of rope factories, sugar centrals and mills, coconut oil mills, cassava mills, and desiccated coconut From 2% to 3% factories Sec. 205 2. Contractors, proprietors (Contractors) or operators of dockyards, and others From 3% to 4% Sec. 205-A 3. Hotels, motels and others From 10% to 12% (Hotels, motels, etc.) Sec. 206 4. Caterers (Caterers) a) Proprietors or operators of restaurants, refresh- ment parlors, and other eating places, including clubs and caterers From 3% to 4% b) Proprietors or operators of restaurants, bars, cafes and other eating places, including clubs, where distilled spirits fermented liquors or wines are served: On sale of food From 3% to 4% On sale of liquor From 7% to 8% c) Proprietors or operators of restaurants, refresh- ment parlors, bars, cafes and other eating places within premises of caba- rets, night or day clubs From 10% to 12% d) Proprietors or operators of restaurants, refresh- ment parlors, bars, cafes and other eating places within premises of Jai- Alai and race tracks From 20% to 25% Sec. 207 5. Common carriers by land, (common air or water, and keepers Carriers of garages From 2% to 3% Sec. 208 6. Stock, real estate, (Brokers, commercial customs, and cinematographic immigration brokers. From 6% to 7% film owners, lessors and distributors) Cinematographic film owners, lessors and distributors From 2% to 3% Sec. 209 7. Dealers in securities and (Dealers in lending investors From 5% to 6% securities, lending investors) The above increases in rates take effect beginning October 15, 1984. All Internal Revenue officials, employees and others concerned are hereby enjoined to give this Revenue Memorandum Circular the widest publicity possible. (SGD.) RUBEN B. ANCHETA Acting Commissioner