BIR Ruling

July 13, 1972 Messrs. Bunning & Co., Inc. 120 Juan Luna Street Manila Gentlemen : This refers to your letter dated July 10, 1972 requesting information as to whether or not your Company may be considered a "processor" or "manufacturer" of finished products within the meaning of the "Memorandum to Authorized Agent Banks" of the Central Bank dated February 21, 1970, quoted as follows: "2. Firms engaged in the processing or manufacture of finished products, chiefly for exportation, or with an export potential as evidenced by a record of exportation or export contracts, in which at least 70 per cent of total raw materials, provided at least 50 per cent of total production is destined for export. "3. Firms engaged in the processing or manufacture of finished products in which the actual or potential net foreign exchange earnings (total foreign exchanged earned out of the exportation of the product less total foreign exchange required to produce the finished product exported and to service the operations of the firm) of each individual firm a year shall not be less than $20,000." In reply, I have the honor to inform you that stripped tobacco is for, internal revenue purposes, a manufactured product. As a matter of fact your business tax status is that of a manufacturer of tobacco (Sections 182(a)(3)(r) and 194(m), Tax Code. cdta Considering that your stripped tobacco is of itself a finished product and that much more than 50% thereof is exported, it would appear that you easily fall with the ambit of the Central Bank memorandum. Furthermore, at least in the light of internal revenue and at least with your stripped tobacco, this Office may venture the opinion that you are an "export oriented firm." Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue