Taxability of Fishermen Producing Dried and Salted Fish Out of Fresh Fish

October 16, 1968 BIR RULING NO. 024-68 Mr. Luis B. Gonzales c/o P. O. Box 210 Zamboanga City S i r : This refers to your letter dated May 21, 1968 requesting information as to whether or not Filipino fishermen are subject to the percentage tax for producing dried fish and salted fish; and if so, the percentage tax due and the deduction, if any. cdi In reply, I have the honor to inform you that Filipino fishermen producing dried and salted fish out of fresh fish which they catch are exempt from the payment of the sales tax pursuant to Section 188(b) of the Tax Code. However, if the fresh fish which they manufacture into dried fish and salted are purchased from others, their sales of such products are subject to the 7% sales tax imposed in Section 186 of the Tax Code. Under the law, only the cost of raw materials which have been previously subjected to the same rate of tax as the finished product, can be deducted from the gross sales of the latter. Since the fresh fish purchased by the manufacturers of dried fish and salted fish are not raw materials previously subjected to the 7% sales tax under Section 186 of the Tax Code, the cost thereof cannot be deducted from the gross selling price of the manufactured dried fish and salted fish for purposes of the sales tax. prcd Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue