BIR Ruling

April 2, 1973 Mr. Anthony D.S. Smith President & General Manager A. D. Smith Cinema (Phil.), Inc. CCC Building, Buendia Avenue Makati, Rizal S i r : This refers to your letter dated March 20, 1973 requesting certification of examination from the compensating tax on your importations of cinematographic films particularly negative films to be used by you in the manufacture of articles subject to specific tax. You stated that you have been charged 7% compensating tax on these importations pursuant to the interpretation by the Collector of Customs of Section 190 (a) of the Tax Code, as amended by Presidential Decree No. 69 of which, however, you disagreed. In reply, I have the honor to quote hereunder Section 190(a) of the Tax Code, as amended by Presidential Decree No. 69, viz: "Sec. 190 Compensating tax . On the commodities, goods, wares or merchandise purchased or received by persons residing or doing business in the Philippines, there shall be paid a compensating tax on the total value thereof, including freight, postage, insurance, commission and similar charges, equivalent to the percentage taxes imposed under this Title on original transaction effected by merchants, importers, or manufacturers, such tax to be paid before the withdrawal or removal of said commodities, goods, wares or merchandise from the customs house or the post office, exempt as follows: "(a) Articles subject to the specific taxes under Title IV of this Code and articles to be used by the importer himself in the manufacture or preparation of articles subject to specific taxes;" It is clear from the foregoing that your importation of cinematographic or negative films to be used by you in the manufacture of articles subject to specific tax is exempt from the compensating tax. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue