BIR Ruling

September 5, 1969 The Proprietor & General Manager Interiors Home Furnishers 607-609 Echague St. Manila S i r : This refers to your letter dated August 7, 1969 requesting information as to what business tax you are liable to for engaging in the following business activities: "1. We manufacture chairs, tables, beds, cabinets, and other household and office furniture; 2. The above household and office furniture are manufactured in pursuance of an order from a customer; "3. These furniture are arranged, installed, and/or styled by us inside the residence or office of our customers inasmuch as they utilize our services which specialize in interior decoration; "4. We always have ready made household and office furniture on stock as well as the raw material needed in manufacturing the said furniture; "5. We have in our daily payroll a continuous force composed mostly of carpenters, painters, varnishers, upholsterers, and interior decorators; "6. Actually we follow certain standard sized in the manufacture of these furniture." In reply, I have the honor to inform you that under the foregoing facts, you are a manufacturer and a contractor. For manufacturing furniture, you are subject to the annual fixed tax of P20.00 and to the 7% sales tax on your sales of manufactured furnitures which are not upholstered, pursuant to Section 182 (A)(1) and 186 of the Tax Code. However, the sales of upholstered furniture (except rattan); tables, desk, chairs, showcases, bookcases, lockers, and cabinets (other than filing cabinets) of which wood, rattan, or bamboo is not the component material of chief value is subject to the 30% sales tax imposed in Section 185(c) of the same Code. For undertaking the installation, and/or styling of the furniture in the residence or office of your customers for a separate fee and for rendering interior decoration services, you are considered a contractor, subject to the annual fixed tax of P20.00 and to the 3% tax in accordance with Sections 182(A)(1) and 191 of the Tax Code. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue