10% Sales Tax — Potato Chips

December 12, 1979 BIR RULING NO. 115-79 10% sales tax potato chips This refers to your letter dated July 18, 1978, written for and behalf of a client, requesting clarification on what is the taxable rate imposed on the sale of potato chips. It is represented that your client is engaged in the business of selling potato chips, that it has its own farm in Baguio and Trinidad Valley from which it extensively grows its potatoes to be used in the preparation of the potato chips; that the processes involved in the preparation of this product are peeling, slicing and frying which process is, according to you, a form of drying the purpose of which is to reduce the water content from about 70% to as low as 8% to 7%, and the addition of salt to the dried potato to add taste or flavor; and that after these processes are completed; the potato chips are packaged and are then finally sold. In reply thereto, please be informed that the sale of potato chips, made in accordance with the processes enumerated above, is subject to 10% sales tax on the gross selling price thereof, as imposed by Section 199 of the Tax Code of 1977, as amended by P.D. No. 1358.