Taxability of Imported Tape Recorders

January 26, 1966 BIR RULING NO. 005-66 Mico Industries, Inc. 661-667 Sales St. M a n i l a Gentlemen : With reference to your letter dated September 17, 1965, I have the honor to inform you that under Section 185-B of the Tax Code as enacted by R.A. No. 4122, imported tape recorders are subject to 30% advance sales tax. Tape recorders at this stage of progress in electronics are definitely used as articles for reproducing music. Congress may reasonably be assumed to be aware of this fact when it specifically mentioned tape recorders as example of articles for reproducing music. It may be stated by way of elaboration that the articles mentioned in Section 185-B are as a general rule subject to 30% tax. However, when the articles are locally manufactured, as defined therein, the tax is reduced to 7%. The privilege of reduced rate of tax on said articles is intended as an assistance to the local electronics industry and as a means of securing a lower market price thereof to enable the common mass the opportunity of acquiring possession the same. Therefore, when any of the articles covered by Section 185-B are imported, such as tape recorders, the normal rate of tax, which is 30%, necessarily applies. Notwithstanding the foregoing, however, this Office is not unmindful of the fact that tape recorders are also used for recording materials as a medium for instructions. In such case, they may be removed from the purview of Section 185-B and placed within the purview of Section 186 as ordinary articles subject to only 7% tax. In the light of this dual use of tape recorders, your case may be resolved as follows: All tape recorders imported by you shall be subjected to 30% advance sales tax. However, upon proof that the tape recorders have been used for instructional purposes, the amount paid in excess of the 7% tax due thereon shall be refunded subject to the limitations prescribed by Section 309 of the Tax Code. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue