Taxability of Packaging Materials, Like Wooden Crates or Wooden Boxes, for Toilet Bowls, Tanks, and Accessories

March 3, 1987 BIR RULING NO. 064-87 163 (2) 064-87 M a d a m : This refers to your letter dated January 3, 1987 requesting in behalf of your client, Antonio Enterprises, a ruling as to whether the packaging materials, like wooden crates or wooden boxes, for toilet bowls, tanks, and accessories which it supplies to Sanitary Wares Manufacturing Corporation, a domestic corporation engaged in the manufacture and sale of nitreous china sanitary wares are subject only to 10% sales tax. In reply, please be informed that any article subject to the original sales tax when used as 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 [(Sec. 163(2), Tax Code, as amended by Executive Order No. 36 effective August 1, 1986)]. Accordingly, since the finished articles are classified as essential articles subject to 10% sales tax, the packaging materials which your client manufactures are subject to the same rate of 10% sales tax, provided that the customers-purchasers shall certify that such packaging materials shall be used exclusively as parts and accessories of said finished articles. atdc On the other hand, if the buyer fails to issue the said certification, the packaging materials shall be subject to the 20% sales tax. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner