BIR Ruling

June 5, 1972 Association of Provincial Taxicab Operators (APTO), Inc. Suite 108 Benlor Bldg. 368 Quezon Blvd. Quezon City Attention: Mr . Faustino V . Canchela President Gentlemen : This refers to your letter dated June 1, 1972 requesting information as to what particular taxes will your association be liable to pay under a proposal to import directly thru its own special dollar allocation CKD units for the use of its members, the local assembler merely assembling the units. You would like also to know what particular taxes shall the local assembler pay which will have to be added to costs to be ultimately shouldered by you, should the same CKD units be imported by the local assemblers under the assemblers own dollar allocations which same units will be sold to you. In reply, I have the honor to inform you that it appearing that your association is not a car assembler or manufacturer, your importation of completely knocked down car units (to be assembled for your association by a car assembler) for your own use is subject to the 100%, 125%, 150% or 200% compensating tax, depending upon the total landed cost thereof, pursuant to Section 190; in relation to Section 184(a), both of the Tax Code. [See Jose Zamora (Golden Taxicab) vs. Commissioner of Internal Revenue, CTA, Case No. 731, March 21, 1964]. The car assembler that shall undertake the assembling of the CKD units for your association shall be subject to the 3% contractor's tax prescribed in Section 191 of the Tax Code on his gross receipts for assembling said units for your association. However, if the same completely knocked down car units are imported by a car assembler for resale to your association, the CKD units are subject to the 7% advance sales tax, the tax to be based on the landed cost thereof, plus 25% mark-up, pursuant to Section 183(b) in relation to Sections 184(a) and 186, all of the Tax Code. Moreover, the sale of the assembled cars by the assembler or manufacturer to your association shall be subject to the 100%, 125%, 150% or 200% sales tax prescribed in Section 184(a) of the Tax Code, depending upon the selling price of cars to your association. aisadc Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue