Computation of Excise Tax

April 7, 1989 BIR RULING NO. 061-89 151(2) 000-00 061-89 Gentlemen : This refers to your letter dated November 8, 1988 stating that you are the operator of a pyrite mining concession located at Bagacay, Hinabangan, Samar; that you produce pyrite concentrates, a non-metallic mineral product containing 45% sulphur, solely for the fertilizer production and manufacturing requirements of Philippine Phosphate Fertilizer Corporation; and that the Bureau of Mines and Geo-Sciences had certified to the fact that pyrite concentrates are non-metallic mineral products. Based on the foregoing facts, you request confirmation that your computation of excise tax indicated in the following illustration is correct. Unit Price Actual Market Value 200,446 DMT Pyrite P134.82 P2,756,529.72 Concentrate Excise Tax 3% __________ Excise Tax Due P82,695.89 ========= In reply, please be informed that since pyrite concentrates are non-metallic minerals, the same are subject to the 3% excise tax "based on the actual market value of the annual gross output thereof at the time of removal." [Sec. 151(2), Tax Code] "Gross output" is interpreted as the actual market value of minerals or mineral products, without any deduction from mining, milling, refining, (including all expenses incurred to prepare the said minerals or mineral products in a marketable state) as well as transporting, handling, marketing, or any other expenses. [Sec. 152(b)(I), Ibid ] In other words, the above computation is correct if the basis of the tax is actual market value of the annual gross output at the time of removal. cd Very truly yours, (SGD.) JOSE U. ONG Commissioner