Rates of Sales Tax Due on Refrigerators and Air-conditioning Units

February 13, 1959 BIR RULING NO. 067-59 Angel Jose Transportation, Inc. P.O. Box 896, Manila Gentlemen : In answer to your letter of the 10th instant, requesting information, for and in behalf of your client, the Refrigeration Industries, Inc., on the rates of sales tax due on the articles enumerated therein, I have the honor to inform you as follows: cdll Refrigerators and air-conditioning units imported in complete knocked-down condition for the purpose of assembling them prior to their resale are subject to the advance sales tax of 30% prescribed in Section 183(b), in relation to Section 185 of the Tax Code, as amended. Imported spare parts, replacements and accessories for use in the assembly of refrigerators and air-conditioning units are also subject to the abovementioned rate of advance sales tax. On the other hand, imported raw materials, such as copper tubings and fittings, which are subsequently cut and shaped so as to be used in the manufacture of refrigerators and air-conditioners, are subject to 7% advance sales tax only, pursuant to Section 183(b), in relation to Section 186 of the same Code. cdt Assembled refrigerators and air-conditioners, whether self-contained with a mechanical refrigeration compressor, or supplied with chilled water or a refrigerant, are subject to 30% sales tax, pursuant to Section 185 of the aforesaid Code. It may be stated that the basis for computing the advance sales tax is the total landed cost of the imported article plus the corresponding mark-up, while that of the ordinary sales tax, the gross selling price of the assembled or manufactured products minus the total cost of deductible raw materials. cdti Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue