BIR Ruling No. 006-63

February 27, 1963 BIR RULING NO. 006-63 Carlos M. Ortega & Associates Law Office 205 Arevalo Building 637 Quezon Boulevard, Manila Gentlemen : This has reference to your letter dated November 12, 1962, soliciting enlightenment regarding the taxability of the proposed business of your client which consists in the milling of palay husk and corn cobs to a certain fineness suitable for hog consumption. cdll In reply, I have the honor to inform you that for engaging in said business, your client will be constituted as a manufacturer subject to the fixed annual tax of P20.00 and 7% sales tax imposed in Sections 182(A)(1) and 186 of the Tax Code. The sales tax is based on the gross selling price of the manufactured products, minus the total cost of raw materials used which have been previously subjected to either the same tax or the 2% miller's tax under Section 189 of the Tax Code. Should the palay husk and corn cobs be purchased from rice and corn millers, the cost thereof are deductible, the same being taxable to the latter as by-products of rice and corn, but if they are given away free, necessarily, no cost can be deducted. However, should your client himself be a miller, or in other words, he will not buy from others whatever raw materials will be utilized in the manufacture of his products, then he cannot deduct the cost of any raw material. Your client is also subject, in proper cases, to the income and additional residence taxes. llcd Very truly yours, (SGD.) JOSE B. LINGAD Acting Commissioner of Internal Revenue The above ruling was duly signed by the Acting Commissioner of Internal Revenue on February 27, 1963. (SGD.) P. F. LANDAS Revenue Operations Head (Legal)