BIR Ruling

May 18, 1967 Major Simeon C. Cruz Supply Center, AFP Camp General Emilio Aguinaldo Quezon City S i r : This refers to our letter to you dated December 7, 1966 wherein we held as follows: "The privilege tax paid by the taxpayer as manufacturer of drugs includes the manufacture of clothing provided that the manufacture of both drugs and clothing is conducted in the same establishment. If the manufacture of clothing is conducted in a separate establishment, a separate C-14 privilege tax receipt should be secured for said establishment." cdtech The Marsia Drug Corporation is requesting clarification of the ruling. It appears that your inquiry was made in connection with the bidding for the tailoring or sewing of Army uniforms. It is represented by Marsia Drug Corporation that the AFP furnishes the materials and the bidder does only the tailoring or sewing. In this connection, please be informed that the winning bidder will be constituted not as a manufacturer but as an independent contractor. An independent contractor is subject to the P20.00 fixed tax prescribed by Section 182(A)(1) of the Tax Code and to the 3% tax on gross receipts prescribed by Section 191 of the same Code. As regards the AFP requirement pertaining to the presentation of the privilege tax receipt of the bidder, please be further informed that, as liability of the bidder for the contractor's privilege tax is fixed only after the acceptance of his bid, this Office believes that the presentation of the privilege tax receipt may be made after the acceptance of the bid. In further clarification of the ruling contained in our letter dated December 7, 1966, it may be stated that the manufacturer's privilege tax under Schedule and Paragraph No. C-14 is payable for every establishment where the business of manufacturing is conducted. And the business of manufacturing under C-14 includes the manufacture of all kinds of articles subject to the sales tax. LLjur Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue