Request for Egg Trays Purchased from Manufacturers to Be Subject to the 0% Sales Tax

June 26, 1986 BIR RULING NO. 097-86 165-A-4 182-85 097-86 S i r : This refers to your letter dated May 20, 1986 requesting in effect, that the egg trays you purchase from their manufacturers be subject to the 0% sales tax under Section 165 of the Tax Code as amended by Section 3, P.D. No. 2031. It is represented that you are a producer of table eggs; that large scale marketing of table eggs from the poultry farm to the supermarket and eventually to the consuming public requires that the table eggs are placed on egg trays; that these egg trays are made of pulp board and used exclusively as container and/or trays for table eggs. In reply, please be informed that in general, materials, parts and accessories of articles subject to sales tax on original sale shall be subject to tax at the same rate as the finished articles; provided, however, that materials, parts and accessories of articles classified as agricultural products, including breeding stocks, which are taxable at 0% under Section 165(a)(4) of the Tax Code, as amended, shall be taxed at the same rate as the finished product, if such materials, parts and accessories and breeding stocks can only be used exclusively in the manufacture or production of an article taxable at 0% rate. (Sec. 6, Revenue Regulations No. 5-86). Accordingly, egg tray which are exclusively used in the production of table eggs are subject to 0% rate. In other words, the manufacturer of egg trays which are used exclusively as container and/or trays for table eggs is not subject to sales tax on the original sale thereof. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner