Taxability of Weaving Business Making Placemats, Napkins, Bags, Curtains, Dresses and Home Decors

March 19, 1987 BIR RULING NO. 079-87 163 (4) 000-00 079-87 Gentlemen : This refers to your letter dated February 14, 1987 stating that you are in the weaving business making placemats, napkins, bags, curtains, dresses, and home decors and have been paying business taxes at the rate of 10% since 1974 to some parts of 1985; that this was increased to 20% which you find very exorbitant since all your products are dyed by hand and made by hand, a high labor intensive process; that with the 20% sales tax, your profit comes to a point that you almost break even with all the hard work and capital investment; that you want to maintain your employment of more than 300 people by doing local retailing when you have no orders for export. You now request that your aforesaid manufactured products be subject to 10% sales tax only. In reply, I regret to inform you that your request cannot be granted for lack of legal basis. As manufacturer of placemats, napkins, bags, curtains and home decors you are subject to the 20% sales tax under Section 163(4) of the Tax Code, as amended by Executive Order No. 36 which took effect on August 1, 1986. However, as manufacturer of dresses which are considered essential articles, you are subject to 10% sales tax. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner