Deductibility of Imported Raw Materials under the Partial Exemption Incentive of Republic Act No. 5186

September 17, 1973 BIR RULING NO. 024-73 Deductibility of imported raw materials under the partial exemption incentive of Republic Act No. 5186 . Section 186-A of the Tax Code provides that "whenever a tax-free product is utilized in the manufacture or production of any article, in the determination of the value of such finished article, the value of such tax-free product shall be deducted." The Supreme Court in the case entitled "Republic Flour Mills, Inc. vs. Commissioner of Internal Revenue, G.R. No. L-25602, February 18, 1970", interpreted the aforequoted provision of the Tax Code as "all encompassing to comprehend tax-free materials, even if imported." If the cost of completely tax-free imported raw materials is deductible in full from the gross selling price of the finished product, then all the more reason there is for allowing the deduction of the cost of partially exempted raw materials under Republic Act No. 5186.