BIR Ruling

September 4, 1967 Hon. Isidro C. Kintanar Chairman, Committee on Ways & Means House of Representatives Manila S i r : This refers to the letter of your Administrative Assistant dated August 4, 1967 stating the following: cdtech "The Chairman, Committee on Ways and Means, House of Representatives, would like to be furnished with copies of BIR Rulings and decisions pertinent to the collection of percentage taxes under Sections 183(a), 183(b), and 183(c) of the National Internal Revenue Code. We are studying the case of importation of motorcycle parts by a duly licensed and franchised assembler of motorcycles whose importation of parts are required to pay the advance sales (percentage) tax under Section 183(b) when such original importation of parts are not for sale, or transfer of title or ownership upon release from customs jurisdiction but are mainly and invariably to be used in the manufacture of complete motorcycles. Question: What steps are necessary and what requirements must be complied with so that the above-mentioned importer need not pay the advance sales tax before release from Customs jurisdiction and instead avail of the mode of payment of the sales tax under Section 183(a) or 183(c)?" In reply, I have the honor to inform you that motorcycles (two-wheeled) are not automobiles for sales tax purposes. Consequently, the importation of parts and accessories of motorcycles in knock-down condition for assembly purposes is subject to the 7% advance sales tax, based on the landed cost thereof, plus 25% mark-up, pursuant to Section 183(b) in relation to Section 186, both of the Tax Code. Moreover, the sale of the manufactured motorcycles (two-wheeled) shall be subject to the 7% sales tax prescribed in Section 186 of the Tax Code. The knock-down parts and accessories for purposes of assembly by the importer are subject to the advance sales tax under Section 183(b) of the Tax Code, because they form part of the manufactured articles, (motorcycles) which are intended for sale. LexLib Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue