Tax Exemption Privilege of Bataan Pulp and Paper Mills

February 1, 1985 BIR RULING NO. 013-85 200 000-00 013-85 S i r : This refers to your letter dated January 28, 1985 requesting a ruling on the questions raised therein bearing on the tax exemption privilege of your client, Bataan Pulp and Paper Mills. It is represented that your client enjoys tax exemption privileges (except income tax) under Section 8(a) of Republic Act No. 5186; that these tax exemption privileges were extended by the Board of Investments as follows: 100% 1980 1984 75% 1985 1987 50% 1988 1989 20% 1990 1991 10% 1992 1993 In reply, I have the honor to inform you as follows: 1. Your client is exempt from advance sales tax on its imported raw materials to the extent of the foregoing percentages as approved by the Board of Investments. 2. The advance sales tax otherwise due on the raw materials imported by your client (e.g. 75% advance sales tax for 1985) can be credited against the sales tax due on its finished product. (Sec. 200, Tax Code as amended by E.O. 872) 3. Under the pertinent sales tax provisions of the Tax Code, in order that the percentage tax paid on the raw materials may be credited against the sales tax due on the finished product, "the amount of the tax on the raw material, part, accessory or other article shall be indicated as separate item in the sales invoice". Accordingly, in the case of your client which now enjoys partial tax exemption, the amount of sales tax otherwise due as well as the amount of sales tax actually paid, e.g. 75% and 25%, respectively, of the sales tax for the year 1985, should be indicated as separate items in the sale invoice to be issued by your client to its customers; otherwise the tax credit will not be allowed. 4. The purchaser of your client's product using the same as raw material in the manufacture of its products can claim as tax credit the entire amount of sales tax indicated as separate items in the sales invoice which includes the 75% tax otherwise due and the 25% tax actually paid. aisadc Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner