BIR Ruling

August 30, 1972 Mr. Felipe F. Joaquin Camangyanan, Sta. Maria Bulacan S i r : This refers to your letter dated July 28, 1972 stating that you are a sawmill operator; that as such sawmill operator you sell lumber at wholesale and retail; that you also sell hardware at wholesale and retail; and that you intend to participate in public bidding for the supply of lumber and hardware to government projects. aisadc Under the foregoing circumstances, you would like to be informed as to whether or not you would be liable to the 3% contractor's tax in the event that you win in any public bidding for the supply of lumber and hardware. In reply, I have the honor to inform you that under the foregoing facts, you are engaged in two distinct and separate business. Thus, as operator of a sawmill, you are subject to the manufacturer's fixed annual tax of P50.00 and your sales of sawn lumber is subject to the 7% sales tax pursuant to Sections 182(A)(1) and 186, respectively, of the Tax Code. And on the assumption that you purchase the hardware that you supply to your customers and the government, you are a dealer, subject to the graduated annual fixed tax prescribed in Section 182(A)(2) of the same Code, the initial amount of which is P10.00; thereafter, the amount of tax will depend upon the amount of gross sales during the preceding calendar year. However, your sales of lumber (which is subject to 7% sales tax) and hardware to the government is not subject to the 3% contractor's tax prescribed in Section 191 of the Tax Code. cdtech Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue