BIR Ruling No. 094-65

August 20, 1965 BIR RULING NO. 094-65 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P. O. Box 589, Manila Attention : Mr . B . V . Abela Tax Department Gentlemen : This refers to your letter of October 13, 1964 stating that your client, Jackbilt Concrete Products, Inc., is engaged in the manufacture of concrete products which are subject to 7% sales tax; that it purchases sand and gravel from the suppliers thereof to be used as raw materials in the manufacture of said products; and that in its recent purchases of these raw materials, the suppliers did not pay the 7% sales tax thereon believing that they are subject only to the 3% contractor's tax. You now request information whether or not your client can deduct the cost of sand and gravel from the gross selling price of its manufactured products notwithstanding the fact that the suppliers had not paid the sales tax thereon. In reply, I have the honor to inform you that, under the foregoing circumstances, your client can deduct the cost of the raw materials from the gross selling price of its manufactured products for purposes of the manufacturer's sales tax provided that such cost is duly established by the corresponding sales invoices and that the suppliers are in fact the producers and not mere dealers thereof; and provided still further that the names and addresses of said suppliers are communicated to this Office in order that the sales tax can be collected from them. aisadc Very truly yours, (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue