Shifting of the Sales Tax to the Customer

January 22, 1959 BIR RULING NO. 061-59 Elizalde & Co., Inc. P. O. Box 121 Manila Gentlemen : In reply to your letter dated December 5, 1958, I have the honor to inform you as follows: For the purpose of shifting the sales tax to the customer, it is sufficient that the sales invoice contains a notation that the tax is included in the gross selling price, such as the phrase "tax included". Where the sales invoice merely states "tax included", the sales tax is computed in the following manner: Gross selling price (tax included) P_________ Less: Deductible cost of raw materials P_________ Difference 107% 100% taxable amount 7% sales tax In the case of a tax-exempt industry, the sales tax shall, during the year 1959, consist of only 10% of the 7%. the percentage rate of diminishing exemption is measured by the calendar year. In the case of an industry which is operating on the fiscal year basis, the income tax return to be filed in 1959 within sixty (60) days after the close of its fiscal year, in your case, June 30), will necessarily include income from July 1 to December 31, 1958 and income from January 1 to June 30, 1959. In such case, the income from July 1 to December 31, 1958 is exempted in full but the income from January 1 to June 30, 1959 is entitled to only 90% exemption. Similar treatment will lie in respect of the succeeding fiscal years. The percentage taxes will not, however, be affected by the fiscal year accounting system because they are payable monthly. cdt Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue