Correct Procedure in Computing Percentage Sales Tax

December 1, 1966 BIR RULING NO. 065-66 AJAX RUBBER PRODUCTS CO., INC. 285 Vito Cruz Ext., Makati Rizal Attention : Mr . John A . Paradies Vice-President Gentlemen : This refers to your letter dated September 28, 1966 requesting information as to the correct procedure in computing the percentage sales tax pursuant to General Circulars Nos. 431 and 440 dated July 29, 1939 and October 12, 1939, respectively. You also stated that you are being guided by said Circulars as interpreted in the case of "Connell Bros. Co. (Phil.) vs. Collector of Internal Revenue." cdtech In reply thereto, I have the honor to inform you as follows: In the case of Connell Bros. Co. (Phil.) vs. Coll. of Int. Rev., G.R. No. L-15470, prom. Dec. 26, 1963, the Supreme Court held that the sales tax should be billed as separate item in the invoice issued, and unless billed to the purchaser as separate item in the invoice, the amounts intended to cover the sales tax shall be considered as part of the gross selling price of the articles sold. Your understanding of the application of the circulars in question is not correct. The tax stands independently of the gross selling price and is not considered as an addition or diminution of the gross selling price indicated provided that the correct amount thereof is billed. The correct computation of the sales tax may be illustrated viz: casia Gross selling price xxxxx Less: Deductible cost of raw materials xxxxx Difference xxxxx Multiply by rate of tax % Sales tax xxxxx ===== Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue