BIR Ruling No. 069-64

November 13, 1964 BIR RULING NO. 069-64 Messrs. Valera, Reyes & Associates Suite 207, Roces Hermanos Building 437 Rizal Avenue, Manila Gentlemen : Reference is made to your letter dated July 17, 1964 submitting substantially the following problem in connection with the implementation and/or application of Section 185-B of the Tax Code as inserted therein by Republic Act No. 4122 which took effect on June 20, 1964: "ABC Company paid in July 1964 on sales of Radio-Phonograph combination manufactured by it before but sold after June 20, 1964 a sales tax computed as follows: "Sales P10,000.00 LESS: Cost of raw materials used previously taxed at 30% and/or 7%, plus respective mark-ups 8,000.00 Taxable Amount 2,000.00 7% Sales Tax Due thereon P 140.00 Questions: 1. Has ABC Company paid the tax correctly? 2. Can it deduct from the sales price the cost of raw materials included in its inventory as of June 20, 1964 on which (a) 30% sales tax has been paid previously, (b) Raw materials used in manufacturing operations after June 20, 1964 on which 7% tax has been paid either before or after the effectivity of Republic Act No. 4122?" In reply thereto, I have the honor to inform you as follows: On the assumption, as represented by you, that ABC Company qualifies as a manufacturer within the contemplation of Republic Act No. 4122, and its products, as locally manufactured products under said law, at the time of manufacture, your questions may be answered as follows: aisadc 1. The computation of the tax was not correctly made because, since the law took effect on June 20, 1964, only "locally manufactured articles" manufactured on and after that date are covered by the reduced rate of tax. 2. The cost of raw materials included in the company's inventory as of June 20, 1964 which were previously taxed at 30% as well as of raw materials used in its manufacture after said date which were previously subjected to 7% tax either before or after June 20, 1964 is deductible from the gross selling price of the company's products. Very truly yours, (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue