Sales Tax Rates Imposed on Fancy and Ordinary Donuts

February 10, 1984 BIR RULING NO. 036-84 201 (h)-000-00-036-84 S i r : This refers to your letter dated December 15, 1983 requesting confirmation of your opinion that your fancy and ordinary Donuts are subject to the sales tax at the rates 10% and 5%, respectively. It is represented that you manufacture two kinds of Dunkin' Donuts, i.e. fancy and ordinary; that you classify your Donuts as fancy if the weight of the sugar, fats and oil contents constitute less than 15% of the weight of the flour; and that the Food and Drug Administration has certified that the sugar and fat contents of the ordinary type of Dunkin' Donuts is 9.7%. In reply, please be informed that pertinent portion of Section 2 of Revenue Regulations No. 19-81 reads as follows: "(a) Essential articles subject to five percent (5%) sales tax under Section 201 of the National Internal Revenue Code as amended, e.g. xxx xxx xxx "(4) All other bakery products made from first class bread or hard flour and/or all purpose flour, yeast leavened, with sugar, fat and oil constituting not more than fifteen per centum (15%) of the weight of the flour." "(b) All other bakery products not listed in the preceding paragraph nor falling within the definition of subparagraph (4) shall be subject to ten per cent (10%) sales tax under Section 199 (a) of the National Internal Revenue Code as amended." Under the foregoing provisions of the regulations, your opinion is hereby confirmed that fancy Donuts containing sugar, fat and oil constituting 15% of the weight of the flour are subject to 10% sales tax under Section 199 (a) of the Tax Code. On the other hand, ordinary Donuts containing sugar, fat and oil constituting less than 15% of the weight of the flour are subject to 5% sales tax under Section 201 (h) of the same Code. aisadc Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner