BIR Ruling

March 6, 1975 Atty. Evencio R. Martinez Boie Bldg., Alamanza Las Pias, Rizal S i r : This refers to your letter dated November 4, 1974 requesting clarification on the following: "In view of the lack of local supply of glass containers (containers for lotions or perfumery and cosmetic preparations), local glass manufacturers do not manufacture them owing to small quantity requirements, there is the need, therefore, for one to import such glass containers under Central Bank Commodity Classification: 'UP 665-01-09, Other Bottles and Containers and Stoppers of Common Glass, n. es., with Tariff Heading 70.10B. 50% Duty.' "(a) Question : For taxability under the Tax Code, the importer holds that such empty glass containers for lotions or perfumery and cosmetic preparations are subject to percentage taxes covered by Sec. 186, at the rate of 7%, this position being upheld by a ruling which states: 'Containers are, as a general rule, regardless of destination thereof, considered ordinary articles, and therefore, subject only to 7% sales tax under Sec. 186 of the Tax Code. They are not considered parts or accessories of the articles contained or placed in them.' (Ruling, BIR, 105-02, Nov. 12, 1976) cdta Is the above contention of the importer-taxpayer correct? "(b) Question : If said empty glass containers imported, bear already the label of the product, such marking or label is imprinted on the surface of the bottles (not paper label), will the rate of tax on the said bottles be different? Basing upon the abovecited ruling, the importer holds that the tax rate will be the same, 7%. Is the position of importer correct? "A corporation, for its primary purpose, 'is engaged in the agro-industrial and commercial activities or game cook and/or poultry husbandry, developing, breeding and/or training game cocks from fowls of different classes or of pedigreed breeders, and thereby exploiting economic beneficence through the sale of such cocks and fowls, and/or eggs.' The corporation holds the view that it is engaged in producing agricultural products and is, therefore, exempt from the payment of percentage taxes pursuant to Sec. 188(b) of the Tax Code, as well as exempt from the payment of the graduated fixed tax, as supported also by BIR Unnumbered Ruling of March 15, 1973. " Question : Is the above contention of the corporation correct?" In reply, I have the honor to inform you as follows: As correctly stated in your letter, containers are, as a general rule, regardless of the destination thereof, considered ordinary articles and, therefore, subject only to the 7% sales tax under Section 186 of the Tax Code. They are not considered parts or accessories of the articles contained or placed in them. However, imported empty glass containers which already bear the label of the product, such label or marking having been imprinted on the surface of the bottles, constitute such empty glass containers as part of the product to be contained in them. In such cases, the rate of such imported bottle containers follow the rate of tax of the products to be contained in them. And if, as stated in your letter, the imported glass containers already imprints the name of the product to be contained in them such as lotions, perfumes and cosmetic product which are normally subject to 70% sales tax under Section 184 of the Tax Code, then the rate of sales tax applicable to such imported empty glass containers is 70%. With regard to your second query, please be informed that the corporation alluded to in your letter, which is engaged in raising, developing, breeding and/or training game cocks from fowls of different classes or of pedigreed breeders and sells such game cocks, fowls and/or eggs, is a producer of agricultural products. As such producer of agricultural products, it is exempt from the payment of the sales tax on its sales tax of the aforesaid agricultural products pursuant to Section 188(b) of the Tax Code. Moreover, it is exempt from the payment of the P50.00 annual fixed tax prescribed in Section 182(A)(1) of the Tax Code. aisa dc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN 1601-593-5