BIR Ruling

July 15, 1966 The Marconi Electronics Corporation 1175 Pasong Tamo Street Makati, Rizal Gentlemen : Reference is made to your letter dated October 29, 1965, requesting approval of your application as integrated local manufacturers for radio and television receiving sets, in order to be subject to only 7% tax on the selling price of your products. cdtech In your letter dated February 22, 1965, you definitely stated that you are manufacturing the following local parts: 1. All types of Chassis for Radios, Stereos and Television. 2. All types of Brackets and Printed Circuit Boards. 3. Tunning shafts and other Metal Parts, 4. All types of Cabinets for above and Office and Household Furnitures. 5. All types of IF Oscillator Antenna Coils, Input and Output Transformers for Tube and Transistor Radios. 6. All types of Coils, and Transformers for Stereos and Television Receiving Sets. The investigation confirmed your representation that you are local manufacturer of the components and parts herein above enumerated. Republic Act No. 4122 enumerates the following parts to be locally manufactured in a manufacturing enterprise and assembling or fitting them together with other imported articles or intermediate component parts into the completed or finished articles , in order that such articles may be considered locally manufactured and therefore, subject to only 7% sales tax, viz: Copper clad boards, silicon, steel laminations, other metal sheets, wires plastic powder and/or pallets, fiber boards, wood, metallic and non-metallic tubes, rods, special paper, etc. The proviso of the same act reads as follows: "Provided, however, That if the following parts are intermediate components of the finished articles . . . They must be locally manufactured within the manufacturing enterprise or any other local manufacturing enterprise : 1. Printed circuit boards; 2. Transformers; 3. Coils, except yoke and flyback, and sheet metalware attached thereto except the mask; 4. Cabinets; 5. Chassis." In view of the fact that you are not actually manufacturing the parts mentioned in your letter dated February 22, 1965, for the purpose of assembling or fitting them with other articles or intermediate component parts into the completed stereos and television sets, the component parts that you manufacture for sale remain subject to the 30% tax under Section 185-B of the National Internal Revenue Code. llcd Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue