Sytengco Philippines Corporation

February 17, 2009 BIR RULING [DA-(EXT-A-001) 088-09] 040-00 Sytengco Philippines Corporation Room 503 Regina Garden II Reina Regente Street Binondo, Manila Attention: Esmer A. Tepace General Manager Gentlemen : This refers to your letter dated November 24, 2008 stating that a laboratory reagent, especially if its is an Analyzed Reagent (AR) or Guaranteed Reagent (GR) as in this case with Ethanol, is a chemical that has gone rigid purification processes to such an extent that the identities of its remaining impurities have been determined and their corresponding contents have been reduced even up to nanolevels, i.e., one part per billion; that this purification process and subsequently, the identification and determination of the contents of impurities are very tedious and expensive processed but they are demanded by the various analytical laboratories and industries where the GR is needed or used; that the Ethanol Absolute GR, ACS, ISO is 99.8% minimum; that no Philippine company can produce Ethanol with such purity in commercial quantities; that it is packed in 2.5 liter glass bottles and comes with a Certificate of Guarantee; that it is used strictly in the following applications which require its highest purity, to wit: 1. Solvent for fatty acids, fats and oils especially from copra, hydrocarbons, resins; 2. Cleaning and degreasing solvent in the electronics and semiconductor industry; 3. Laboratory reagent for synthesis of organic compounds; 4. Diagnostic reagent in hospital laboratories. Based on the foregoing representations, you now request for an opinion that the imported Ethanol Absolute GR, ACS and ISO is distilled spirit which is unfit for human consumption is exempt from excise tax. In reply thereto, please be informed that this Office had already occasion to rule on the matter when it said in BIR Ruling No. 040-00 dated September 13, 2000 , as follows: ". . . Section 134 of the Tax Code of 1997 provides that domestic alcohol of not less than one hundred eighty degrees (180) proof (ninety percent (90%) absolute alcohol) shall, when suitably denatured and rendered unfit for oral intake, be exempt from the excise tax prescribed in Section 141: Provided, however, That such denatured alcohol shall be subject to tax under Section 106(A) of the said Code. . . " A careful scrutiny of the above-cited section disclosed that only domestic denatured alcohol which are unfit for human consumption shall be exempt from excise tax. However, considering that no provision in Title VI of the said Code which provides for the rate and basis of excise tax on imported denatured alcohol, this Office is of the opinion as it hereby holds that the same rates and basis of excise taxes applicable to locally manufactured articles, like domestic denatured alcohol in this case, pursuant to Section 131(B), supra, shall be applied. Accordingly, your importation of denatured alcohol which are unfit for oral intake shall be exempt from excise tax. The importation and sale however, of the said denatured alcohol are respectively subject to the 10% (now 12%) VAT under Sections 107(A) and 106(A) of the Tax Code of 1997." SUCH BEING THE CASE, since the aforecited ruling is in all fours similar to the instant case, the importation of Ethanol Absolute GR, ACS and ISO which is unfit for human consumption is likewise EXEMPT from excise tax. However, the importation and sale of the said Ethanol Absolute are subject to the 12% VAT. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service