BIR Ruling

September 30, 1975 The Regional Director Revenue Region No. 3-A San Fernando, Pampanga S i r : This refers to your letter dated September 5, 1975 requesting information whether the computation of compensating tax due on goods purchased by veterans and their dependents from U. S. Base Post Exchange and Commissaries, in the following manner is correct, viz.: cdt $50.00 x P7.00 P350.00 P350.00 x 7% P 24.50 In reply, please be informed that the bases of the compensating tax is the landed cost of the imported article. Landed cost has been consistently construed to mean the invoice value plus freight, postage, insurance, commission, customs duty and all similar charges or all expenses incurred by the importer before the release of the goods from customs custody. In your computation as illustrated above, it is noted that the customs duty is not added to the purchased price. If the articles are subject to the customs duty, then your computation is not correct. It is also noted that the tax rate used is only 7%. Not all articles purchased from the Post Exchanges inside the U.S. Military Bases are subject to the 7% sales tax. It is of common knowledge that there are articles purchased from said Post Exchange which are subject to 40% and 70% sales tax. In view of the foregoing, you are instructed to determine first the classification of the commodity purchased whether it is subject to the 7% 40% or 70% sales tax; and to add to the purchase price the corresponding customs duty if subject to the customs duty in order to arrive at the correct compensating tax due on the aforesaid articles. aisa dc Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN 1456-040-3