BIR Ruling

October 29, 1973 The Commissioner of Customs Port Area, Manila S i r : This refers to your 1st Indorsement dated May 17, 1973 relative to the letter dated May 7, 1973 of Mr. Leonardo C. Dioko requesting a ruling on the applicability of the amendment contained in Presidential Decree No. 69, whereby the percentage tax on the sale of processed milk, meat, fruit, wheat, poultry and animal feed is reduced from 7% to 5%. In reply, I have the honor to inform you that the imported wheat used as raw material in the manufacture of wheat flour by the importer thereof is subject to the 5% advance sales tax prescribed under Section 186-B of the Tax Code, as amended by Presidential Decree No. 69. Imported milk, either in powder or liquid form and in semi-processed or unprocessed from which is also used as raw material in the manufacture of milk, food products, such as ice cream butter, cheese etc., by the importer thereof, is likewise subject to the 5% advance sales tax pursuant to Section 186-B of the Tax Code, as amended by Presidential Decree No. 69. However, the importation of milk, which is already in the processed form and is imported for purposes of resale, is subject to the 7% advance sales tax prescribed under Section 183(b) in relation to Section 186, both of the Tax Code. For purposes of Section 186-B of the Tax Code, processed milk include such milk products which have undergone the process of curing, canning, bottling or similar processes. A taxpayer who made an overpayment of the advance sales tax may request for the refund of the excess in the amount of sales tax within two (2) years from the payment thereof. Section 186-B specifically provides that where the articles are manufactured out of materials subject to tax under said section, Section 186 and Section 189, the total cost of such materials, as duly established, shall be deductible from the gross selling price or gross value in money of the manufactured articles. acd Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."