Cinematographic Film Regulations

May 2, 1967 REVENUE REGULATIONS NO. 07-67 SUBJECT : Cinematographic Film Regulations TO : All Internal Revenue Officers and Others Concerned SECTION 1. Scope . Pursuant to the authority granted in section 338, in relation to section 4, Commonwealth Act No. 466, otherwise known as the National Internal Revenue Code, as amended, the following regulations prescribing the manner in which the specific tax on printed positive cinematographic films shall be collected and paid, the procedure to be followed by persons having such films and by the persons subject to the payment of the said tax, the permits to be secured, and records to be kept by them, and the procedure, to be followed by internal revenue officers, are hereby promulgated to supersede all precedents, rulings and regulations heretofore issued on the same subject. CHAPTER I Payment of the Specific Tax SECTION 2. Liability of Cinematographic Film to the Specific Tax . The specific tax imposed by section 146 of the National Internal Revenue Code shall be collected, once only on cinematographic films manufactured or produced in the Philippines for domestic sale or consumption and on those films imported from the United States or foreign countries. The specific tax on imported films shall be in addition to the customs duties, if any. cdtech SECTION 3. Payment of Specific Tax on Cinematographic Films . (a) On Locally Manufactured Films . The specific tax on cinematographic films manufactured or produced in the Philippines shall be paid by the manufacturer, producer, owner, or person having possession of the same immediately before removal from the place of production. (b) On Imported Films . Specific taxes on cinematographic films shall be paid by the owner or importer to the customs offices before the removal of the films from the customhouse, or by the person who is found in possession of films which are exempt from specific tax other than those to whom the same is lawfully issued. Before the cinematographic film is sent for preview to the Board of Censors for Moving Pictures, the corresponding specific tax due thereon must first be paid. SECTION 4. Cinematographic Films which are Exempt from the Specific Tax . The specific tax on cinematographic films shall not be imposed on the following: (a) On Locally Produced or Manufactured Films which shall be Removed for Exportation and is Actually Exported without Returning to the Philippines . Consequently, if a cinematographic film is removed for exportation and is actually exported, but is subsequently returned to the Philippines, the specific tax due thereon shall be paid to the customs officers prior to the removal thereof from the customhouse. (b) On Cinematographic Films Used Exclusively for Educational Purposes and for Visual Education . If the film, notwithstanding its educational value, is intended solely for advertisement purposes, the same is not exempt from the specific tax. (c) On tax-paid, locally produced films actually exported but were subsequently returned to the Philippines. (d) Negative or unprinted positive films. (e) Reversed films used in amateur photography of 16 millimeters or less. (f) Cinematographic films to be used in television broadcasts. SECTION 5. Cinematographic Films Used in Television Broadcasts but Used for Other Purposes . Cinematographic films used in television broadcasts which were removed from the place of production or customhouse, as the case may be, free of the specific tax, may be used for other purposes, subject to the payment of the corresponding specific taxes due thereon. In such cases, before such films shall be used for other purposes, the producer, owner or importer thereof, shall notify the Commissioner of Internal Revenue in writing stating the title of the film, the width, the length in linear meters and the number of copies thereof. The Commissioner of Internal Revenue shall forthwith assess the specific tax due thereon. After payment, the film may be used for purposes other than for television broadcasts. SECTION 6. Cinematographic Films Originally Intended for Theater Exhibition . A cinematographic film originally intended and is also used, for public exhibition in theaters shall be subject to specific tax, notwithstanding its occasional use in television broadcasts. However, a copy of the film subsequently produced out of the master negative shall be exempt from the specific tax, if exclusively used for television broadcasts. SECTION 7. Amount of Specific Tax on Cinematographic Films . The amount of specific taxes payable on the cinematographic films shall be as follows: (a) 15 centavos per linear meter on films of more than 8 but not more than 16 millimeters in width; (b) 20 centavos per linear meter on films of more than 16 millimeters in width. In case the film has several copies, the specific tax shall be collected based on the number of linear meters of each and every copy. CHAPTER II Requirements of Persons or Entities Engaged in the Importation, Manufacture or Distribution of Cinematographic Films SECTION 8. Prior Approval of the Commissioner of Internal Revenue Necessary . No person or entity shall engage in the business of importing or manufacturing cinematographic films, until his application to engage in said business and a bond filed in connection therewith is approved by the Commissioner of Internal Revenue. Therefore, no payment of the fixed tax on the said business will be accepted unless the approval of the Commissioner of Internal Revenue is secured. SECTION 9. Application . Any person or entity desiring to engage in the business of producing or importing cinematographic films shall first file an application with the Commissioner of Internal Revenue. The application shall state the name of the applicant, trade name, the principal office or business and, in the case of the producer, the place of production of its films, if located in another place. If the applicant is a corporation or partnership, a certified copy of its articles of incorporation or co-partnership shall be attached to the application. SECTION 10. Manufacturer's and Importer's Bond. Persons and entities desiring to engage in the business of manufacturing and importing cinematographic films shall file a bond in an amount equal, as nearly as can be estimated, to twenty per centum of the specific tax payable by them during an average year. Such bond shall be conditioned upon the faithful compliance, during the time said business is followed, with the laws and regulations relating to such business and for the satisfaction of all fines and penalties imposed by the National Internal Revenue Code. No such bond shall be required in an amount exceeding P50,000.00 nor be received in a sum less than P1,000.00. SECTION 11. Processing and Approval of Applications . Upon receipt of the application together with the required documents attached thereto, the Commissioner of Internal Revenue shall inspect the place of production of the films, in case of locally produced films. Movie studios where films are made and processed should be enclosed and shall have only one opening so as to eliminate the unlawful removal of manufactured films. They must be so located as to be easily accessible to all internal revenue officers at all times. If the Commissioner of Internal Revenue is satisfied that the place where the films are made and processed and that the bond filed by the applicant complies with the requirements of the law and regulations, the application shall be approved. In like manner, the application filed by a person or entity desiring to import cinematographic films shall be approved if the application as well as the bond filed by him complies with the provisions of the law and these regulations. Upon approval of the application, the applicant shall be assigned his administrative schedule, paragraph and assessment number, which shall appear in the signboards displayed in his principal office or movie studio. SECTION 12. Requirements as Regards Distributors of Films . Persons or entities engaged in the distribution of films but are neither importers or manufacturers, shall before engaging in their business file an application with the Commissioner of Internal Revenue stating the name of the applicant, trade name, the principal office or place of business and the place where the films distributed shall be stored. In case the applicant is a corporation or partnership, a certified copy of its articles of incorporation or co-partnership shall be submitted together with the application. Upon receipt of the application, the Commissioner of Internal Revenue shall inspect the premises where the films distributed are stored, if any. The place of storage of films must have only one (1) opening and must be securely locked. They must be so located so as to be accessible to all internal revenue officers at all times. If the Commissioner finds that the said premises for film storage satisfy the requirements of these regulations, he shall approve the application, after which the payment of the privilege tax as cinematographic film distributor shall be accepted. After the approval of the application, the films shall not be removed to any other place, except when the same is removed for public exhibition by theater owners. In case the distributor shall transfer his storage of films, the Commissioner of Internal Revenue shall be notified in writing of such new place of storage, so that the latter can conduct the necessary verification. CHAPTER III Requirements Regarding the Importation, Production and Processing and Removal of Cinematographic Films from the Place of Production SECTION 13. Requirements Regarding Importation of Films . Before importing a film but not later than the actual arrival thereof in the Philippines, the importer shall inform the Commissioner of Internal Revenue in writing of the title of the film, purpose for which the film is imported, number of linear meters, the width, number of copies of the film, the country of origin, the date of arrival, name of vessel or airplane carrying the film. Upon such arrival, the Commissioner of Internal Revenue shall see to it that the corresponding specific tax, if subject thereto, is paid before removal from the customhouse. If the film is exempt from the specific tax, the basis of the exemption should, likewise, be ascertained. SECTION 14. Requirements Before Producing a Film . Before starting the production of a film, the producer thereof shall inform the Commissioner of Internal Revenue in writing of the title of the film, the expected length of the film to be produced in linear meters, the width and the purpose for which the film is produced. SECTION 15. Requirements Before Removal of the Film . After the production of the film is finished and the same is ready for public exhibition, the producer thereof shall, before it leaves the place of production, notify the Commissioner of Internal Revenue in writing, making reference to the previous notice sent by him as required in the preceding paragraph 14 of these regulations. Said notification shall state the title of the film, the length in linear meters, the width and the number of copies of the film. Upon receipt of the said notification, the Commissioner of Internal Revenue shall proceed to inspect the finished film and shall assess the corresponding specific tax due after inspection. The notification required in this section shall be considered as the return of the producer for purposes of the specific tax payable on cinematographic films. The Commissioner of Internal Revenue may, in the absence of fraud, assess whatever specific tax or deficiency tax due on the film within five (5) years from the filing of the said notification. However, in case the notification is false or fraudulent or in case of failure to send the notification, the Commissioner of Internal Revenue shall assess the specific tax or any deficiency tax within ten (10) years from the discovery of the falsity, fraud or omission. SECTION 16. Requirements after Payment of the Specific Tax . After the assessment of the specific tax on the finished film, the producer shall pay the tax assessed. After payment, the producer shall forthwith cause the immediate removal of the films from the place of production. SECTION 17. Payment of the Specific Tax on Certain Occasions . When the film is finished during any day when government offices are closed and that the same is scheduled to be shown on the same day, the requirements prescribed in section 15 of these regulations need not be complied with. However, the specific tax due on the film should be paid in advance on or before the last working day preceding the date the film is to be finished on the basis of the information furnished the Commissioner of Internal Revenue required in section 14 of these regulations. On the first working day after the removal from the place of production, the producer shall pay the deficiency specific tax, if any. On the other hand, in case of overpayment, the provisions of section 309 of the National Internal Revenue Code should be complied with before a refund of tax credit is granted. SECTION 18. Joint Custody of the Master Negative . The copy of the film consisting of the master negative shall be under the joint custody of the Bureau of Internal Revenue and the producer of the film. For this reason, the producer shall inform the Bureau of the exact place where the said copy is stored and the same shall not be removed by the former without the written authority of the latter. The said master negative can be destroyed only when the same is no longer usable, in the presence of representatives of the Bureau and the producer upon written application submitted by the latter. SECTION 19. Production of Copies of the Film from the Master Negative . In case the producer of the film desires to print additional copies of the film from the master negative, a written notice therefor shall be sent to the Commissioner of Internal Revenue. After the required copies of the film contained in the notice has been finished, the corresponding specific tax due thereon shall be paid before removal from the place of production. SECTION 20. Information to be Given by Manufacturers or Importers of Any Apparatus or Mechanical Contrivance Specifically for the Manufacture of Films . Manufacturers and importers of any apparatus or mechanical contrivance specifically for the manufacture of films shall, before any such apparatus or mechanical contrivance is removed from the place of manufacture or from the customhouse, give information to the Commissioner of Internal Revenue as to the nature and capacity of the same, the time when it is to be removed, and the place for which it is destined, as well as the name of the person by whom it is to be used; and such apparatus or mechanical contrivance shall not be set up nor dismantled or transferred without a permit in writing from the Commissioner of Internal Revenue. (Sec. 160, Tax Code) SECTION 21. Registration of Film Production Apparatus and/or Movie Studios ; Submission of Report . Producers of cinematographic films, at the same time, owning film production apparatus and/or movie studios, shall register said apparatus and/or studios with the Commissioner of Internal Revenue. Persons or entities owning film production equipment or apparatus and/or movie studios but do not produce cinematographic films, but merely lease said apparatus and/or studios to other film producers shall, likewise, register their apparatus or studios. Registration shall be made within ten (10) days from delivery, in the case of the apparatus, and from the completion of the construction, in the case of the movie studio. In the registration, the owner shall furnish data regarding the kind of equipment or apparatus, make, serial number and any other pertinent description as well as the location of the movie studio. Such persons or entities owning film production apparatus and/or movie studios shall submit a report to the Commissioner of Internal Revenue as to any film being produced and processed with the use of their apparatus and/or studios which film belong to other persons or entities engaged in the production of films. Said report shall be submitted at the start of the production of the film and shall state the title of the film and the producer thereof. Failure to submit a report on the film when the film is already finished will render the owner of the film production or apparatus and/or movie studio liable for the payment of the specific tax due on the film in case the film producer is unknown and cannot be ascertained and the specific tax is not yet paid on the film. CHAPTER IV Requirements Incident to Refund of the Specific Tax on Cinematographic Films and Exportation of Said Films SECTION 22. Refund of Specific Tax on Tax-Exempt Films . The specific tax paid on tax-exempt cinematographic films enumerated in section 4 of these regulations shall be refunded after filing a written request therefor with the Commissioner of Internal Revenue within two (2) years from the date of payment of the tax. SECTION 23. Refund of the Specific Tax Paid on Films Banned by the Board of Censors for Moving Pictures . (a) On Imported Films . In the case of imported films banned from public exhibition by the Board of Censors for Moving Pictures, the specific tax paid thereon shall be automatically refunded, in accordance with section 12 of Republic Act No. 3060, provided that the film is returned by the importer or distributor thereof to the country of origin or to any other place outside of the Philippines within a period of thirty days from the date of receipt by the importer or distributor of the decision of the Board banning the motion picture for exhibition in the Philippines; (b) On Locally-Produced Films . In the case of locally-produced films banned from public exhibition by the Board of Censors for Moving Pictures, the specific taxes paid thereon shall be refunded upon filing a written claim for refund within two (2) years from the date of payment of the tax, in accordance with the provisions of section 309 of the National Internal Revenue Code, provided that the film is destroyed in the presence of representatives of the Bureau of Internal Revenue and the producer or is exported abroad without returning to the Philippines. SECTION 24. Exportation of Cinematographic Films Subject to Specific Tax . Cinematographic films produced in the Philippines for export to foreign countries which under the National Internal Revenue Code, are exempt from the payment of the specific tax shall be entered by the manufacturer in his official register book with the words, "For Export." (a) Notice of Export Shipments . Any producer who removes cinematographic films for export shall immediately prior to said removal, notify the Commissioner of Internal Revenue of the intended removal, giving the title of the film, the width and the length in linear meters. The discovery of any such films in transit in regard to which no notification has been received shall be deemed prima facie evidence of the illegal removal of the same, and shall subject them to forfeiture. (b) Delivery Direct to Ship or Aircraft . All cinematographic films removed free of the specific tax for export shall be sent direct from the place of production to the ship or aircraft carrying them outside the Philippines. (c) Proof of Exportation . Exporters of cinematographic films that would be subject to a specific tax if sold or removed for consumption in the Philippines are required to submit proof of exportation satisfactory to the Commissioner of Internal Revenue. Proof of exportation will not be deemed satisfactory unless submitted within thirty (30) days from the date of removal from the place of production, except when the producer submits proof that the film is still being held for exportation. The proof of exportation satisfactory to the Commissioner of Internal Revenue shall consists of a certified copy of the bill of lading or air waybill on the back of which the exporter shall execute a certificate in the following form: ______________, Philippines ______________, 19 ______ I hereby certify that this shipment was removed on ___________ for exportation to __________________________ on board ____________________________________________ (name of ship or aircraft) which left on ______________. ___________________ Signature of Exporter In all cases where the proof of exportation is not submitted within the thirty-day period, or where such proof is submitted within the period, but the same is not satisfactory, the producer or exporter shall be required to pay the specific tax. Such payment shall be entered in the official register book of the producer stating the date and number of the official receipt covering the payment. (d) Exporter's Bond . When deemed necessary, an exporter shall be required to give a bond for an amount equivalent to the specific tax due on the exported film prior to the removal of the film for shipment, conditioned upon the exportation of the same in good faith. CHAPTER V Books, Records and Reports SECTION 25. Official Register Book . The Commissioner of Internal Revenue shall supply the manufacturers or importers of cinematographic films with the official register book (BIR No. _____). Whenever any manufacturer or importer shall have qualified himself as such by executing a proper bond, registering his factory and paying the privilege tax and shall have complied with all the requirements necessary to engage in such business contained in the National Internal Revenue Code and these regulations, the Commissioner of Internal Revenue shall deliver to said manufacturer or importer the necessary official register book under Paragraph A, Schedule 10. SECTION 26. General Nature of the Official Register Book . The official register shall bear the assessment number of the manufacturer or importer. It shall have a "Debit" side and a "Credit" side. In the "Debit" side, there shall be entered in the columns provided for the purpose, the title of each film received, date received, the name and address of the entity from which the film was received, the length in feet of unprinted negative and unprinted positive films received, the length in feet of printed negative and printed positive films, the width of the films, the number of rools and the equivalent length of printed films in meters. In the "Credit" side, there shall be entered the date the film was removed, sold or disposed of, the title of the film, the number of copies, the length in feet of printed negative and printed positive film, the consignee of the film, length of the printed positive film in meters, the specific tax due and paid and the number and date of the official receipt covering the payment. At the end of the month, the producer or importer or the manager in case of an entity, shall certify that the entries on the page of the official register book contain a true and complete account of all cinematographic films manufactured, received or imported during the month, in the case of the debit side, and those removed, sold or disposed of during the month in the case of the credit side. SECTION 27. Monthly Transcript Sheets to be Rendered . Every producer or importer shall promptly at the end of each month and not later than the eight day of the next succeeding month make and present to the Commissioner of Internal Revenue, a true and exact transcript of all entries made on both the "Credit" and "Debit" sides of his register book during the preceding month. The producer or importer shall make the same certification as required in the official register book. The transcript forms shall be identical in form with the debit and credit pages of the official register book described in the preceding section 26 of these regulations and will be supplied by the Commissioner of Internal Revenue. SECTION 28. Film Distributors to Submit Inventory of Films . Distributors of cinematographic films who are neither importers nor manufacturers shall, within thirty (30) days from the effectivity of these regulations submit to the Commissioner of Internal Revenue an inventory of the films under distribution by them, stating the title, width, length and number of copies of the film as well as the source of the film. Thereafter, at the end of each month and not later than the eight day of the next succeeding month they shall make and present to the Commissioner of Internal Revenue a similar inventory of the films received by them during the previous month from importers or manufacturers. Said inventory shall also include similar data with regard to films which are no longer being offered for public exhibition for being unusable. The inventories of films submitted by the film distributors shall be checked against the list of films appearing in the transcript sheets provided for in section 27 of these regulations. If any film is listed in these inventories which is not listed in the said transcript sheets, action will immediately be taken for the collection of the specific tax due on such unlisted film against the film distributor for being the possessor thereof, in case the importer or manufacturer thereof cannot be ascertained. SECTION 29. Preservation of Books , Records , Reports and Invoices . All books, records and reports required to be kept under these regulations as well as all invoices received by cinematographic operators or persons dealing in cinematographic films from producers or importers of films shall preserve such books, records, reports and invoices within five (5) years from the last entry therein and shall be subject to examination and inspection at any time by internal revenue officers. SECTION 30. Cinematograph Operators to Report Films . Owners or managers of cinematographs shall, on the first day that a film or films are exhibited, furnish the Collection Agent of the city or municipality where the cinematograph is located, and in Manila, the Commissioner of Internal Revenue, with a signed statement in duplicate showing the regular title of each film to be exhibited and the name of the owner of the film. The Collection Agent shall forward both copies of such statements direct to the Bureau of Internal Revenue as soon as they are received. The statements required in this section may be copies of the regular printed programs with the names of the owners of the films written if such programs give the true names of the films exhibited. If no films are shown by the manager of a cinematograph during any calendar month, he shall at the end of such month certify to the Collection Agent that no films were exhibited and such certificates will be forwarded immediately direct to the Bureau of Internal Revenue. These statements of films exhibited as soon as received by the Bureau of Internal Revenue shall be checked against the list of films appearing in the transcript sheets provided for in the preceding section. If any film is listed in these statements which is not in the said transcript sheets, action will immediately be taken for the collection of the specific tax due on such unlisted film against the owner or operator of the cinematograph exhibiting the film, for being the possessor thereof, in case the distributor, importer, producer or owner thereof cannot be ascertained. CHAPTER VI Penal Provisions SECTION 31. Unlawful Possession or Removal of Films Subject to Specific Tax . Any person who is found in possession of films subject to specific tax, the tax on which has not been paid in accordance with law, or any person who is found in possession of films which are exempt from specific tax other than those to whom the same is lawfully issued shall be punished by a fine of not less than ten times the amount of the specific tax due on the film found but not less than P200 nor more than P5,000 and by imprisonment of from 4 months and 1 day to 4 years and 2 months. Any manufacturer, owner or person in charge of any film subject to specific tax who removes or allows or procures the unlawful removal of any such film from the place of manufacture or bonded warehouse, upon which film the specific tax has not been paid in the time and manner required, and any person who knowingly aids or abets in the removal of such articles as aforesaid, or conceals the same after illegal removal, shall for the first offense be punished by a fine of not less than 10 times the amount of the specific tax due on the film removed, but not less than P500 nor more than P10,000 and by imprisonment of not less than 6 months and 1 day but not more than 6 years. Every manufacturer so offending shall, before continuing or resuming business, execute a bond double the amount of his original bond and containing the same conditions. The mere unexplained possession of films subject to specific tax, the tax on which has not been paid in accordance with law, shall be punishable under this section. SECTION 32. Violation of the Provisions of these Regulations . A person who violates any provision of these regulations for which delinquency no specific penalty is provided by law, shall be punished by a fine of not more than P300 or by imprisonment for not more than 6 months, or both. SECTION 33. Forfeiture of Films Illegally Stored or Removed . All films subject to specific tax which are stored or allowed to remain in a bonded warehouse or place of manufacture after the tax thereon has been paid shall be forfeited; and all films unlawfully removed from any such place or from customs custody, or brought or received in this country not through the Bureau of Customs without the payment of the required tax shall likewise be forfeited. cdi Effectivity SECTION 34. Date of Effectivity . These regulations shall take effect upon publication in the Official Gazette. EDUARDO Z. ROMUALDEZ Secretary of Finance Recommended by: MISAEL P. VERA Commissioner of Internal Revenue 1st Indorsement February 22, 1968 Respectfully returned to the Commissioner of Internal Revenue, Manila, the attached proposed Revenue Regulations No. 7-67, dated May 2, 1967, which shall be known as the "Cinematographic Film Regulations", prescribing among others the manner in which the specific tax on printed positive cinematographic films shall be collected and paid and the procedure to be followed by persons subject to the payment of said tax, approved. aisadc EDUARDO Z. ROMUALDEZ Secretary