Compensating Tax - Laboratory Equipment

April 19, 1979 BIR RULING NO. 018-79 Compensating tax laboratory equipment This refers to your letter dated February 12, 1979 requesting for exemption from payment of compensating tax of 8 various laboratory equipment imported from Germany and England to be used in a continuing survey of the concentration of far, nicotine and carbonmonoxide on locally produced tobacco and tobacco products. The following is the list of such equipment: "(1) Smoking Machine for Cigarettes, including accessories and spare parts "(2) Tar Predictor "(3) Steam Distillation Apparatus (two Kinds) and including spare parts "(4) Karl-Fisher Titration Apparatus and accessories "(5) Co-measuring Apparatus and accessories "(6) Filter Tipping Machine "(7) Hauni baby for Cigarette Making "(8) Two units Haanen and Badum extractors" In reply thereto, please be informed that exempt from taxation can only be claimed on the clearest grant of organic or statute law. It appearing that Republic Act No. 1135, the Act establishing the Philippine Tobacco Administration, as amended by Presidential Decree No. 288, does not grant your office exemption from payment of compensating tax on your importation of equipment then your request has to be, as it is hereby denied for lack of legal basis. It may be relevant to state further that "all units of government, including government-owned or controlled corporations, shall pay income taxes, customs duties and other taxes and fees as are imposed under revenue laws". (Sec. 23 P.D. No. 1177). You are therefore urged to pay the 10% compensating tax on your importation of equipment, based on their total landed cost thereof, prescribed in Section 204, in relation to Section 199, both of the Tax Code of 1977, as amended by Presidential Decree No. 1358.