BIR Ruling

July 8, 1970 Regicon Manufacturing Corporation 104 Biglang Awa Caloocan City Attention: Mr . Teofilo Ora, Jr . Accountant Gentlemen : This refers to your letter dated June 26, 1970, requesting information on the amount of sales tax payable by you under the following circumstances: "a) We will buy as materials laminated printed board and laminated board and paper to make cartoon boxes for our customer packaging requirements. "b) We will buy as materials plain board and paper and have other company laminate and print it for us to make cartoon boxes for our customer packaging requirement." In reply, I have the honor to inform you that the corporation is a manufacturer of cartoon boxes and as such, is subject to the 7% sales tax on its gross sales of said articles, pursuant to Section 186 of the Tax Code, as amended. However, the cost of the materials purchased by the corporation and on which the 7% sales tax had previously been paid is deductible from the gross sales of cartoon boxes. In other words, the tax due from the corporation shall be based on gross sales less cost of taxpaid materials purchased from others. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue