BIR Ruling No. 075-63

October 22, 1963 BIR RULING NO. 075-63 Mr. Treadie C. Jimenez R-309 Gonzaga Bldg. 414 Rizal Avenue Manila S i r : Reference is made to your letter dated June 25, 1963, stating the following: cdt "Company X is engaged in made to order articles and in which case it supplies the materials to be used. "Questions: (a) Is the total amount to be paid by the customer including the cost of the materials used be subject to the 3% percentage tax? "(b) Can Company X deduct for income tax purposes the raw materials used, if so, will it be the same presentation in the financial statement as manufacturer? In reply thereto, I have the honor to inform you that a person who manufactures articles only upon a pervious order, nevertheless, remains a manufacturer, unless the business engaged in by him falls among those enumerated Section 191 of the Tax Code, in which case, he becomes a contractor. Should corporation X qualify as contractor, it must pay the 3% tax based on the total amount paid by the customer including cost of both labor and materials. For income purposes, the cost of raw materials used by Company X, a manufacturer, should be treated as part of cost of goods sold in the same manner as presented in the financial statement of a regular manufacturer. In any event, the cost of raw materials is deductible. Very truly yours, (SGD.) RAMON T. OBEN Acting Commissioner of Internal Revenue