Rate of Advance Sales Tax Payable on the Importation of Several Products

February 20, 1987 BIR RULING NO. 054-87 164 278-86 054-87 Gentlemen : This refers to your letter dated December 3, 1986, requesting in effect, a ruling as to the rate of advance sales tax payable by you on your importation of the following products with their corresponding end-uses: NAME OF ITEMS USES 1. Food Colors For food colors 2. Food Flavors For food flavorings 3. Citric Acid For pharmaceutical and flavor materials for soft drinks and confectioneries 4. Gum Arabic For pharmaceutical and confectioneries 5. Methyl Salicylate For pharmaceuticals 6. Coumarin For flavoring & pharmaceuticals 7. Vanillin For flavoring & pharmaceuticals 8. Industrial Salt For pharmaceutical & confectioneries 9. Carboxylmethyl Celulos For pharmaceuticals 10. Menthol For confectioneries & pharmaceuticals 11. Lactose For food products 12. Ethyl vanillin For flavoring In reply, please be informed that any article, subject to the original sales tax, when used as a raw material in the manufacture or preparation of essential articles, shall, subject to certain conditions be taxed at the same rate as the finished product, except when such material is taxed at a lower rate. (Section 163 (2), Tax Code, as amended by Executive Order No. 36). Consequently of the abovementioned products imported by you, only those which are used as raw materials in the production or manufacture of essential articles enumerated in Section 163(2)(a) of the Tax Code, shall be taxed at the same rate of 10%. In such a case, the purchasers shall certify to you as importer that the articles shall be used exclusively in the manufacture or preparation of any of the said essential articles. If the purchasers fail to issue the certification, the raw materials considered as non-essential and ordinary articles shall be taxed at the rate of 30% and 20%, respectively. On the other hand, if the raw materials are used in the manufacture of finished articles considered as ordinary, as in the case of Nos. 3, 4, 8 and 10, i.e., for production of confectioneries, then the raw materials considered as non-essential and ordinary, shall, likewise, be taxed at the rate of 30% and 20%, respectively. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner