Presidential Directives Regarding the Imposition of Fixed and Percentage Taxes on Marginal Farmers

October 16, 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 President 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 farmer" refers to small, subsistence farmers. It certainly does not cover the affluent ones and those who are engaged in large-scale farming. cdt 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 income tax e. The suspension is prospective in character and does not affect privilege and sales taxes already collected. This Order should be given the widest possible dissemination for the information and guidance of all concerned. Immediate compliance herewith is required. cdta EFREN I. PLANA Acting Commissioner of Internal Revenue