When Deficiency in Advance Sales Tax is Incurred

June 13, 1985 BIR RULING NO. 091-85 193 (b) 000-00 091-85 Gentlemen : In reply to your letter dated July 30, 1984, please be informed as follows: 1. Pursuant to Section 75 of the Tax Code, every corporation subject to income tax, or otherwise engaged in business or trade within the Philippines, when required by the Commissioner of Internal Revenue, shall render a correct return duly verified under oath, of its payments of profits or dividends, whether made in cash or its equivalent or in stock, including the names and addresses of members or stockholders, the paid-up capital or the number of shares owned by each, and the tax years and gains or earnings from which such dividends or profits were derived. A corporation, however, is not required to report to the Commissioner of Internal Revenue such corporate acts, as issuance of capital stocks and increase of capitalization. 2. A deficiency in advance sales tax is incurred if the amount paid is less than what is due, which results in any of the following situations: a) If the landed cost is understated. b) If a percentage tax rate is erroneously applied. c) If the computation is not made in accordance with Section 193 (b) of the Tax Code as implemented by Sec. 4 of Revenue Regulations No. 8-78 as follows: Total landed cost . . . Add: 25% Mark-up (Ex. Or. No. 883) . . . Tax Base . . . Multiply Per Tax Rate . . . Advance sales tax . . . Total landed cost refer to the total of the following: 1. The home consumption value or price in the country where the article is purchased or produced. 2. Ten per cent (10%) of such home consumption value. 3. Postage, commission, customs duty and all similar charges except freight and insurance imposed or incurred prior to the release of the goods from customs custody (Sec. 2, R.R. 8078) 3. Excess advance sales tax on the other hand results from any of the following situations: cdtech a) The landed cost is overstated. b) A higher percentage tax rate is erroneously applied. c) A higher mark-up is applied than what the law requires. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner