Membership Pins Exempt from Tax

January 29, 1997 BIR RULING NO. 011-97 Sec. 150 000-00 011-97 The Honor Society of Phi Kappa Phi University of the Philippines (UP) Chapter c/o University Center for Womens Studies Magsaysay cor. Ylanan St., UP Diliman, Q.C. Attention: Ms . Sylvia H . Guerrero, Ph . D President Gentlemen : This refers to your letter dated October 4, 1996 in effect, requesting a ruling as to whether membership pins are exempt from tax. In support of your request, you submitted a brochure dated October 4, 1996 simultaneous with your letter request; that these pins are valued by the members as a symbol of academic excellence; that the primary objective of the national Honor Society of Phi Kappa Phi is the recognition and encouragement of superior scholarship in all academic disciplines; that the society is convinced that in recognizing and honoring those persons of good character who have excelled in scholarship, in whatever field, it will stimulate others to strive for excellence; that the society serves the interests of the student capable of excellency by insisting that in order to acquire a chapter of Phi Kappa Phi, an institution provide the means and atmosphere conducive to academic excellence; that these pins were sent through the United Parcel Services (UPS) from the Phi Kappa Phi National office in Baton Rouge, Louisiana, U.S.A.; that duties on these pins total P7,226.00; that these pins do not have commercial value; that only a little over 200 students receive this distinction; that these pins are now currently being held at the NAIA Customs Office. In reply, please be informed that pursuant to Section 150 of the Tax Code as amended, there shall be levied, assessed and collected a tax equivalent to 20% based on the wholesale price or the value of importation used by the Bureau of Customs in determining tariff and customs duties; net of excise tax and value added tax, of the following goods: a.) All goods commonly or commercially known as jewelry, whether real or imitation pearls, precious and semi precious stones and imitations thereof; goods made of, or ornamented, mounted or fitted with, precious metals or imitations thereof or ivory (not including surgical and dental instruments, silverplated wares, frames or mountings for spectacies or eyeglasses, and dental gold or gold alloys and other precious metals used in filling, mounting or fitting of the teeth); opera glasses and lorgnettes. The term "precious metals" shall include platinum, gold, silver, and other metals of similar or greater value. The terms "imitations thereof" shall include platings and alloys of such metals. Such being the case, since those pins do not have commercial value within the contemplation of Section 150 of the Tax Code, as amended, the same is not subject to the 20% tax imposed therein. aisadc Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue