Taxability of Sale of Porcelain Products to Mercury Drug Corporation

February 27, 1992 BIR RULING NO. 069-92 50 069-91 069-92 Royal Tatung Ceramic Corporation 704 Del Monte Avenue Quezon City Attention: Mr . Benito O . Chua, Jr . Controller Gentlemen : This refers to your letter dated June 19, 1992 requesting in effect, a confirmation of your opinion that your sale of porcelain products to Mercury Drug Corporation is not subject to the expanded withholding tax under Revenue Regulations No. 6-85. In reply, please be informed that under Revenue Regulations No. 13-78, as amended by Revenue Regulations Nos. 6-79 and 6-85, implementing Section 50(b) of the Tax Code, payments made only to persons enumerated therein are subject to the expanded withholding tax. Considering that payments made to a contractor engaged in the processing service such as your activity of manufacturing porcelain dinnerwares according to the specification of the purchaser are not included in the aforesaid enumeration, said payments are not subject to the expanded withholding tax. Even if you are not a contractor, but a manufacturer of said products still, said payments to you are not subject to expanded withholding tax. However, since the said payments are not subject to withholding tax, you will render an information return on such payments pursuant to Section 61 of the Tax Code, as amended by Batas Pambansa Blg. 135 and as implemented by Section 21 of Revenue Regulations No. 1-82 dated March 18, 1982. aitdc Very truly yours, JOSE U. ONG Commissioner of Internal Revenue