BIR Ruling

January 25, 1967 The General Manager Sigma Industries, Inc. P.O. Box 2252 Manila S i r : This refers to your letter dated October 10, 1966 requesting in effect that you be allowed to pay only the 7% sales tax, instead of the 30% sales tax, on your sales of locally manufactured phonographs, combination radio and phonograph, gramophones and similar articles. In reply, I have the honor to inform you that in order to enjoy the privilege of the reduced rate of tax provided for in Republic Act No. 4122, the manufacturer of phonographs, television sets, gramophones and similar articles must process physically and/or chemically raw materials such as copper clad boards, silicon, steel laminations, other metal sheets, wires, plastic powder and/or pallets, fiber boards, wood, metallic and non-metallic tubes, rods, special paper; etc., into various intermediate components and parts, and subsequently assemble or fit them together with other imported collaterals or intermediate components and parts resulting in completed and finished articles. From the verbal representations of your accountant, it appears that your firm purchased the component parts from local manufacturers of said parts or from importers thereof; and that it does not manufacture any component or part of the finished products but merely assemble locally manufactured and imported components and parts. Under such circumstances, your firm cannot avail of the reduced rate of tax provided for in the aforesaid law. aisadc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue