BIR Ruling

July 1, 1968 The Managing Director Muller and Phipps (Manila) Ltd. P.O. Box 950 Manila S i r : This refers to your letter dated May 2, 1968 requesting a comparison of the duties and taxes imposed on tobacco leaf, which is also imposable on imported leaf in strip form, under Republic Act No. 4155, with those imposed on direct importations of the same article under the Laurel-Langley Agreement. In reply, I have the honor to quote hereunder the pertinent provision of Section 4, Republic Act No. 4155, viz: "Section 4. Importation of foreign leaf tobacco only for blending purposes . No person shall import leaf tobacco except as herein provided. . . . Provided, further , That no other tariff or taxes shall be imposed on high grade foreign leaf tobacco as imported except an amount equivalent to one hundred per centum of its landed cost." This Office on several occasion ruled that internal revenue taxes are not included in the exemption provided in the last proviso of the aforequoted law, hence, importation of leaf tobacco by an importer who is not a cigarette manufacturer is subject to 7% advance sales tax based on the total landed cost thereof plus 25% mark-up in accordance with Section 183(b) in relation to Section 186, both of the Tax Code. The Laurel-Langley Agreement does not provide for exemption of imported leaf tobacco from internal revenue tax. For this reason, no comparison could be made on taxes on imported leaf tobacco under Republic Act No. 4155 and under the Laurel-Langley Agreement. With regard to customs duties, it is suggested that you write the Commissioner of Customs who has jurisdiction over the matter. atdc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue