BIR Ruling

May 8, 1973 Dr. Mariano F. Flores F & M Food Products Alaminos, Laguna S i r : This refers to your letter dated March 15, 1973 requesting information as to what rights, privileges and exemptions you are entitled under the NACIDA Law. cdtech It is represented that you are the owner-proprietor of the F & M Food Products, engaged in the manufacture of preserved sweets. That said business enterprise is registered with the NACIDA under Certificate of Registration No. 22166 dated June 13, 1969. In reply, I have the honor to inform you that pursuant to Section 11 and 16 of Republic Act No. 3470, as amended by Republic Act No. 5326, otherwise known as the NACIDA law, a cottage industry must be an economic activity in small scale carried on mainly in the homes or in other places for profit and mainly done with the help of the members of the family with capitalization not exceeding P15,000.00. It is also required that the product or products manufactured, produced and sold are those enumerated in Section 11 of Republic Act No. 3470, as amended, and that 75% of the total cost of raw materials utilized in the production or manufacture of cottage industry products consists of raw materials of Philippine origin, except in cases of embroidery, piggery, poultry, livestock and metal craft industries where the latter requirement as to raw materials shall not apply. If the foregoing requirements are met, your business shall enjoy the tax exemption provided under Section 16 of Republic Act No. 3470, as amended by Republic Act No. 5326 which provides: "Sec. 16. The production, manufacture and sale of cottage industry products shall be exempt from all taxes, except specific and income taxes, for a period of five years from the date of registration of the person or firm engaged in the production or manufacture of cottage industry products with the Board: Provided, that seventy-five percent of the total cost of raw materials utilized in the production or manufacture of cottage industry products consists of raw materials of Philippine origin." . . . Very truly yours, (SGD.) CONRADO P. DIAZ Acting Commissioner of Internal Revenue