BIR Ruling

August 26, 1971 Mr. Magin A.. Salmingo Acting Chief Appraiser, Assessment and Collection Division Airport Customhouse Pasay City S i r : This refers to your letter dated March 15, 1971 inquiring whether the particular portion of Section 184(a) of the Tax Code which reads: " Provided , however , That parts and accessories of automobiles imported as replacements or as completely knocked down parts as well as locally manufactured parts and accessories for the assembly of automobiles shall be subject to tax under Section one hundred and eighty-six." cdta covers importation of automobile parts for the personal use of the importer and not for assembly. In reply, I have the honor to inform you that Section 184(a) of the Tax Code refers to replacement parts not only use in the assembly of automobiles but also in the replacement of worn-out parts of those automobiles that have already been used. This theory has been accepted by the Department of Finance as it will be very difficult to tax replacement parts because not being a complete automobile, it cannot be taxed at the graduated rates under Section 184 which depends on the selling price of the automobile. "Replacement parts" for use by the importer himself are, therefore, subject to 7% compensating tax. (Ruling, Secretary of Finance, May 11, 1967) cd Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue