Locally Manufactured Soap or Detergent Subject to the 5% Sales Tax

February 8, 1985 BIR RULING NO. 016-85 201 (d) 000-00 016-85 Gentlemen : This refers to your letter dated December 4, 1984 requesting a ruling as to whether the following products which you manufacture and sell in the Philippines are subject to the 5% sales tax under Section 201(d) of the Tax Code. cdta 1. General cleaning agents and bactericides These cleaning agents and bactericides are usually used for sanitizing in-place of dairy equipment and in food processing lines; as one-step detergent, sanitizer, and deodorizer for hospital housekeeping, food service operations, animal care and research areas; as an insecticide (residual or nonresidual) in food processing areas and to personnel; as chlorinated sanitizer and cleaner for food processing plants; as granular dual halogen sanitizer in breweries, beverages and food processing areas; as liquid quarternary ammonium compound sanitizer used in food industries; used by institutional users as sanitizer detergent, etc. 2. Bottle washing compounds in flake and liquid form These washing compounds come in the form of heavy duty powder/liquid caustic cleaner in food industries; and heavy duty blended alkali (liquid) cleaner also used in food industries. 3. Heavy-duty, all purpose cleaners for canneries, meat packers, and poultry processors These products are milk alkaline general purpose detergents and chlorinated manual cleaner/detergents used in food industries. 4. Highly concentrated detergents for industrial use These highly concentrated detergents consist of heavy duty carbonated builder/detergent for maximum stain and soil removal; alkaline builder/detergent for maximum soil suspension; toilet bowl cleaners; window and glass cleaner/detergent; heavy-duty synthetic detergent; instant silver detarnishment; liquid detergent; dry, organic based chlorine bleach; liquid emulsifier for the heavy-duty grease and stain removal; neutral liquid detergent, bacteriostatic hand soap; high grade general purpose detergent, low foam, powder drain cleaner; stain remover for china and dinnerware; air-conditioner freshener; safe, dry, organic bleach; special laundry detergent, heavy duty alkaline cleaner, heavy duty with bactericide for manual operation; bacteriostatic hand soap; etc. The said products are usually used for laundry, housekeeping applications and used by hotels, restaurants, beverage plants, food industries and other industrial user. 5. Food plant equipment cleaners These food plant equipment cleaners consist of heavy-duty food industry cleaner/detergent; foaming acid cleaner/detergent; self-foaming chlorinated cleaner; beerstone remover; heavy scale remover; heavy duty conveyor lubricant; acidic polishing/brightening compound; liquid acid detergent; heavy duty powder/liquid caustic cleaner, organic sludge conditioner, comolex phosphate type for scale prevention, and pool treatment-chlorine used as water treatment; and concentrated liquid acidic cleaner. 6. A space age process for producing micro finishes on stainless steel and certain specialty alloys These products are composed of granular alkaline etchant for aluminum; electro cleaner/degreaser; bright dip process metal brightener; alkaline metal cleaner after pickling operations; and powerful fast acting alkaline soak cleaner. The usual users of the said products are those in the metal industries. In reply, please be informed that soap detergent are substances that, when dissolved in water, give it the ability to remove dirt from surfaces such as human skin, textiles, and other solids. (16 Encyclopedia 914) Moreover, the word "detergent" is defined in Webster's Third New International Dictionary, unabridged, as: "a cleaning agent: as (a) soap (b) an inorganic alkali, and alkaline salt (as sodium phosphate or a sodium silicate), or a mixture of such compounds for use especially in cleaning metals (as in dairy equipment) called also alkaline detergent (c) any of a large number of synthetic water-soluble or liquid organic surface-active agents for use in washing that resemble soaps in the ability to emulsify oils and hold dirt in suspension but differ in other respects (as in non precipitation of calcium and magnesium salts from hard water in chemical composition) called also synthetic detergent; see ADIONIC DETERGENT, CATIONIC DETERGENT, NONTONIC DETERGENT; compare WETTING AGENT, (d) an oil soluble substance that holds insoluble foreign matter in suspension and is used in lubricating oils and dry-cleaning solvents". In view thereof, based on your representations, that the abovementioned locally manufactured products are soap or detergent, the same are subject to the 5% sales tax imposed by Section 201(d) of the Tax Code, as amended. Your representations are subject to verification. This ruling will be revoked if, after verification, the facts are not as represented. cdtech Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner