BIR Ruling

November 27, 1969 The Manager Oceanic Medical, Inc. 2155 Pasong Tamo Makati, Rizal S i r : This refers to your letter dated November 13, 1969 requesting clarification of BIR Ruling No. 67-037 dated September 27, 1967 wherein this Office among others, ruled that your importation of photographic chemicals and photographic papers for use in your establishment engaged in the business of developing and printing photographic films is subject to 30% compensating tax pursuant to Section 190 in relation to Section 185(j), both of the Tax Code. The request for clarification is based on the interpretation made by the Bureau of Customs that said importations should be subject to the advance sales tax and not to the compensating tax, pursuant to Section 190(b) of the Tax Code considering that the importations are materials to be used in the manufacture of preparation of articles for sale, the manufacture article being the finished photograph. In reply, I have the honor to inform you that the interpretation of the Bureau of Customs is correct if the importations of raw materials are made by manufacturers who are subject to the sales tax imposed in Sections 184, 185 and 186 of the Tax Code and the said importations are to be used in the manufacture or preparation of articles for sale and are to form part thereof. Pursuant to Section 190(b) of the Tax Code, said importations are not subject to compensating tax, in which case, they become subject to the advance sales tax. However, importations of raw materials to be used by persons subject to the 3% contractor's tax under Section 191 of the Tax are subject to the compensating tax. Inasmuch as you are an establishment engaged in the business of developing and printing photographic films which is subject to the 3% tax under Section 191 of the Tax Code your importations of materials for your own use in said establishment remain subject to the compensating tax. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue