BIR Ruling

November 27, 1969 Mr. Norberto J. Fuentes Cor. Libertad & Gatuslao Sts. Bacolod City S i r : This refers to your letter dated October 31, 1969 requesting information on the following: "1. Is the cost of empty plastic bag, jute or cotton bags of local manufacture used as sugar container deductible from the selling price of bagged sugar before the 2% tax is computed? "2. In like manner, is the P4.00 per picul deducted from the selling price of domestic sugar and given to the Amelioration Fund for hacienda laborers and sugar central employees also deductible from the selling price before the 2% tax is computed thereon?" In reply, I have the honor to inform you that the cost of plastic bag, jute or cotton bags purchased locally for use as container of sugar is deductible from the gross selling price or market value of the sugar for purposes of the 2% tax under Section 189 of the Tax Code. However, the P4.00 per picul deducted from the selling price of domestic sugar and given to the Amelioration Fund for hacienda laborers and Sugar Central employees is not deductible. llcd Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue