BIR Ruling

May 26, 1966 The Commissioner Bureau of Customs Port Area, Manila Attention: Mr . Pedro Pacis Collector of Customs S i r : This refers to your letter dated April 18, 1966 requesting clarification regarding the proper interpretation of Section 184(a) in relation to Section 183(b) of the National Internal Revenue Code. The memorandum of Customs Appraiser Dominador Singson attached to your letter shows that D.M.G. Incorporated, Mandaluyong, Rizal, imported fourteen (14) units of Volkswagen, Model 113 which arrived on March 16, 1966 from Germany. It further shows that the advance sales tax on each unit was computed as follows: Value $1,495.00 Exchange @ P3.94 P5,767.25 Duty 2,306.90 Wharfage 1.50 Arrastre 4.55 Brokerage 25.00 Stamps 5.75 Bank Charges 7.21 Landed Cost P8,118.16 Mark-up 100% 8,118.16 Taxable value P16,236.32 Rate of tax 75% Amount of tax 12,177.24 or P12,177.00 You now inquire whether or not the above computation of the tax is in conformity with the provisions of Section 184(a) in relation to Section 183(b) of the N.I.R.C. In reply, I have the honor to inform you that the computation is not consonance with the provisions of Section 184(a). Under this provision, where the selling price of the automobile exceeds P10,000.00 it is taxed at the rate of 100% of the selling price. The selling price referred to in this section, in cases of imported articles, is the amount arrived at by adding to the import invoice value, the freight, postage, insurance, commission, customs duty, other similar charges and the mark-up. In this case, the gross selling price of one Volkswagen is more than P10,000.00 or P16,236.32. Therefore, the correct amount of tax due from each unit is P16,236.32 or 100% of the gross selling price and the total amount of tax collectible from this importation is P227,308.48 (P16,236.32 x 14 units) (Mayon Motors, Inc. vs. Acting Commissioner of Internal Revenue, G. R. No. L-15000, March 29, 1961). cdpr Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue