Exemption from the Payment of the Contractor's Tax

April 9, 1987 BIR RULING NO. 106-87 170 258-86 106-87 Gentlemen : This refers to your letter dated February 10, 1987 stating that since June 24, 1974, you have been registered with the Board of Investments (BOI) pursuant to the provisions of Republic Act No. 5186 as manufacturer of spun yarn with Certificate of Registration No. 74-335 on a non-pioneer status, that you are likewise registered with the BOI pursuant to the provisions of P.D. No. 1789 as amended by BP No. 391 as an export producer on a non-pioneer status with Certificate of Registration No. 86-1117 dated April 28, 1986; that you are importing some of your raw materials (Raw Fiber) on consignment basis for processing into spun yarn for direct and indirect export, and that you paid the corresponding spinning charges in foreign currency. Based on the foregoing, you now request confirmation of your opinion that you are exempt from the payment of the contractor's tax pursuant to Executive Order No. 1045. In reply, please be informed that your opinion is confirmed. As a BOI registered export producer engaged in the processing of spun yarn for direct and indirect export, you are considered as a manufacturer and not as a contractor pursuant to Section 6 of Executive Order No. 1045. Accordingly, you are not liable to the contractor's tax imposed under Section 170 (formerly Section 205) of the Tax Code, as amended. aisadc However, your status as a manufacturer is considered only from the date of the approval of said Executive Order No. 1045 on August 7, 1985. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner