Regulations governing the imposition of specific tax on processed video tape

December 7, 1985 REVENUE REGULATIONS NO. 14-85 SUBJECT : Regulations Governing the Imposition of Specific Tax on Processed Video Tape TO : All Internal Revenue Officers and Others Concerned SECTION 1 . Scope . Pursuant to the provision of Section 277 in relation to Section 134 of the National Internal Revenue Code, as amended, the following regulations are hereby promulgated to implement the provisions thereof. SECTION 2 . Definitions . The following terms shall have the meaning indicated. a. " Videotape " refers to a plastic tape with finely powdered iron oxide or any other magnetic material on which are imprinted or recorded, or on which can be imprinted with electrical signals of sounds and images or data for use in a machine recorder or any other appropriate equipment. b. " Processed or loaded tape " shall mean the video tape with sound and images ready for viewing or playback thru a machine recorder or any other appropriate equipment. c. " Producer/manufacturer/processor " refers to any person engaged in recording, copying, reproducing, processing or any other similar activity intended to process a blank tape or demagnetize a loaded tape into one with electrical signals of sounds and images or data. acd d. " Lessor or distributor " refers to any person who rents or leases processed video tapes to another for a fee. SECTION 3 . Specific tax on video tapes . The specific tax of five pesos imposed under Section 134 of the National Internal Revenue Code shall be collected immediately before removal from the place of production of each processed video tape, ready for playback regardless of length or measurement, manufactured or produced in the Philippines for domestic sale or rental or for any other disposition and those imported from foreign countries. An annual specific tax on the above video tape shall be due on the 1st day of January and every year thereafter and the corresponding internal revenue stamp shall be affixed thereon. To Illustrate: A video tape with the title "The Good Woman" was processed by JAYVEE & Co. and the tax due thereon was paid on November 30, 1986 and bears the revenue strip stamp of 1986. The same tape was still part of the inventory of JAYVEE & Co. on January 1, 1987. In this case, JAYVEE & Co. should again pay the annual specific tax on the same tape entitled "The Good Woman" by affixing a new revenue strip stamp for the year 1987. SECTION 4 . Manner of payment . The payment of the specific tax on video tapes provided for under Section 3 of these regulations shall be denoted and effected by the purchase affixture and cancellation of internal revenue stamps which are consecutively numbered and shall bear a different color every year. casia The stamps shall be cancelled by indicating therein the assessment number of the manufacturer, producer, importer, lessor or distributor by means of a rubber stamp and initialed by the duly authorized revenue enforcement officer. The revenue strip stamps shall be affixed and firmly pasted vertically on cassette's label where the title of the feature is printed. The printing, custody, control and issuance of internal revenue strip stamps on video tape shall be under the responsibility of the Accountable Forms Division. SECTION 5 . Persons subject to the payment of specific tax . a. On locally processed/manufactured tape . Specific tax on video tape shall be paid by the processor or producer before removal from the place of production. In case video tapes are removed from the place of production without the payment of tax, the owner or person having possession thereof shall be liable for the tax due thereon. b. On imported tape . Specific tax on imported video tapes shall be paid by the owner or importer to the customs officers, or by the person who is found in possession of the tapes which are exempt from specific tax other than those legally entitled to exemption. c. On previously paid video tape . The annual specific tax on previously paid video tape whether local or imported shall be paid by the lessor, distributor or person having possession thereof. SECTION 6 . Who shall register . Every person whether already engaged or desiring to engage in the business as importer, manufacturer, producer and lessor or distributor of video tapes must apply in writing and register his business with the Bureau of Internal Revenue enclosing the following papers or documents: a. Certificate of registration of business name with the Bureau of Internal Revenue. b. Certification of registration with the Bureau of Domestic Trade. In addition to the above requirements, the manufacturer, importer, producer or processor must submit the following: c. Certified true copy of the latest income tax return; d. If the applicant is a corporation or partnership, a certified copy of the Articles of Incorporation or Co-partnership registered and approved by the Securities and Exchange Commission; e. Sketch or blueprint of the processing area, storage area and other physical facilities of the establishment; and f. Surety bond together with the certification from the Insurance Commission. SECTION 7 . Where to apply and register . The application for registration and permit shall be filed with the Oil and Miscellaneous Tax Division, Room 810, BIR Building, Diliman, Quezon City, for those whose establishments are located in Metro Manila, including Cabuyao, Laguna and Apalit, Pampanga as defined under Revenue Administrative Order No. 2-84 dated December 19, 1983. For other places, the same shall be filed with the Chief, Field Operations Division, thru the Excise Tax Area Team Office concerned. When a person operates separate processing studio and/or owns other outlets, he shall register each business with a separate permit. SECTION 8 . Manufacturer/Importer's bond . Manufacturers, producers, processors and importers of video tapes shall file a bond in an amount equal, as nearly as can be estimated, to twenty percent of the specific tax payable by them during an average year. Such bond shall be conditioned upon the faithful compliance with the laws and regulations relating to such business and for the satisfaction of all fines and penalties imposed by the code. No such bond shall be required in an amount exceeding five hundred thousand pesos nor be received in a sum less than ten thousand pesos. SECTION 9 . Payment of privilege tax . Upon approval of the application for registration and before the issuance of a Business Permit to Operate, the applicant must pay the following annual Privilege Tax Receipts: cdt A. Manufacturer/Processor/Importer P500.00 B. Lessor/Distributor P300.00 SECTION 10 . Requirements regarding importation of video tapes . Before the release from Customs custody, the importer must secure an Authority to Release Imported Goods from the Oil and Miscellaneous Tax Division if in Metro Manila, and in any other place, from the Chief, Excise Tax Area Team, for imported video tapes and shall pay the corresponding tax due thereon in accordance with the provision of Section 4 of these regulations. Unloaded video tapes or blank tapes are subject to the payment of sales taxes. SECTION 11 . Registration of apparatus and/or mechanical contrivance . Manufacturers or producers of video tapes, owning apparatus or mechanical contrivance or persons or entities owning equipment or apparatus solely for the processing of video tapes, shall register said equipment with the Commissioner of Internal Revenue. The owner shall furnish data regarding the kind of equipment, make, serial number and any other pertinent description as well. SECTION 12 . Official Register Book . The Commissioner of Internal Revenue shall supply the manufacturer, producer, processor or importer of video tapes with the official register book (BIR Form No. _______) The official register book shall bear the assessment number of the manufacturer or importer. It shall have a "Debit" and a "Credit" side. On the debit side , there shall be entered in the columns provided for the purpose the following: acd a. Date received; b. Number of copies; c. Title of tape; d. Name and address of entity from whom received; e. Number of revenue strip stamps purchased with the corresponding serial numbers. On the credit side , there shall be entered the following: a. Date removed or sold; b. Title of tape; c. Number of copies; d. Number and date of the official revenue tax receipt covering the payment of the revenue strip stamp; e. Serial number of revenue strip stamps. At the end of the month, the manufacturer, processor, producer or importer or manager shall certify that the entries on the page of the official register book contain a true and complete account of all tapes manufactured, received or imported during the month, in the case of the debit side, and those removed or sold during the month in the case of the credit side. cd i SECTION 13 . Monthly transcript sheet to be rendered . Every producer or importer shall, on or before the eighth day following the month of operation, make and submit to the Commissioner Attn.: Chief, Oil and Miscellaneous Tax Division, thru the Chief, Excise Tax Area Team, as the case may be, a true and exact transcript of all entries made on both the debit and credit sides of his register book during the preceding month. The transcript form shall be identical with the debit and credit pages of the official register book described in the preceding section of these regulations, duly certified by the producer or importer and attested by duly authorized revenue enforcement officer. SECTION 14 . Quarterly inventory list to be rendered . Every lessor or distributor shall submit a quarterly list of inventory of video tapes not later than the eight day after the eighth day after each quarter indicating thereon the title of each feature and the number of copies thereof. SECTION 15 . Inventory/stocktaking . After every six months from the date of last stocktaking, the BIR shall conduct a general total physical inventory of the actual number of tapes, loaded or unprocessed including in process tapes. SECTION 16 . Investigation/Examination . Every manufacturer, importer, processor, lessor or distributor of video tapes shall be subject to an investigation or examination of his official register book, book of accounts and other related accounting records, for specific tax purposes at least once a year, except in case of prima facie evidence of fraud. SECTION 17 . Assignment of revenue officers . The Commissioner or his duly authorized representative may assign such number of revenue personnel at the processing establishment of the manufacturer or producer for an effective supervision and control of its operation. SECTION 18 . Transitory provision . Within one month after the effectivity of these regulations, all manufacturers, producers, processors, importers, lessors or distributors of video tapes are required to register and submit an inventory of loaded or processed video tapes as of January 1, 1986 with the Commissioner and thereupon pay the corresponding specific tax due thereon in accordance with section 3 of these regulations. SECTION 19 . Effectivity . These regulations shall take effect January 1, 1986. (SGD.) CESAR E.A. VIRATA Minister of Finance Recommending Approval: (SGD.) RUBEN B. ANCHETA Acting Commissioner