10% Advance Sales Tax - Industrial Diamonds

March 6, 1979 BIR RULING NO. 005-79 10% Advance sales tax industrial diamonds This refers to your letter dated January 31, 1979, requesting, in effect, opinion as to the proper rate of tax applicable to the 5,000 carats industrial diamonds imported by you to be used in the manufacture of diamond drill bits for sale to mining companies. In said letter, you stated the diamond drill bits are used with drilling equipment basically by mining companies for exploration, location and blocking of mineral ore bodies; that diamond drill bits are also used by builders in foundation studies for infrastructure projects. Moreover, you stated that industrial diamonds are also used on abrasive tools such as marble saws and polishers, and glass cutters; and that they are not the type of diamonds that are used as articles of jewelry or for ornamental purposes. cdt In reply, I have the honor to inform you that the terms "precious stones" and "semi-precious stones" as used in Section 194 (a) of the Tax Code of 1977, as amended, do not include industrial diamonds. Accordingly, the industrial diamonds imported by you are subject to the advance sales tax at the rate of 10% based on the landed cost thereof, plus 25% mark-up, pursuant to Section 193 (b) of the Tax Code of 1977, in relation to Section 199 of the same Code, as amended by Presidential Decree No. 1358.