BIR Ruling

September 30, 1975 Mr. Benjamin Palaypay Proprietor Vima General Merchandise & Gift Shop Premier Hotel's Lobby cor. Misericordia & Tetuan Sts. Manila S i r : This refers to your letter dated September 9, 1975 stating that you are operating a gift shop located at Premier Hotel, Sta. Cruz, Manila; that in the course of your business, some foreign guests staying in said hotel and other downtown hotels, sometimes offer for sale to you assorted items; that these articles were originally brought in not in commercial quantities and the corresponding duty and sales tax duly paid upon arrival at the international airport or the pier, as the case may be; that most of these goods were brought in and intended as gifts to friends and relatives, but for one reason or another, they are not all given away before the time the foreign guest is scheduled to leave Manila, hence, these items are offered for sale so that such guest may be able to raise some money to pay hotel bills or bring some Philippine made souvenir items to be brought back to their home country. With the foregoing as a premise, you would like to be informed whether you can buy the aforesaid articles and subsequently sell them in your gift shop without violating any internal revenue law or regulation. I reply, I have the honor to inform you that there is no internal revenue law or regulations which prohibits you from buying the aforesaid previously tax paid imported articles. The only problem is when the aforesaid imported articles were released from customs custody upon payment of the compensating tax and the same articles are now sold to you for resale. In this case, there arises a deficiency advance sales tax on the imported articles which you must have to pay to this Office upon Purchase of the articles from the foreign guests or tourist. The deficiency advance sales tax shall be computed on the basis of the landed cost of the articles plus the corresponding mark-up less the compensating tax already paid on the same articles. cdta Very truly yours, (SGD.) EFREN I PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."