Rate of Percentage Tax Paid by Maker of Plastic Containers for Margarine and Accessories for Milk Products

August 12, 1986 BIR RULING NO. 147-86 165 (A) (3) 124-86 147-86 Gentlemen : This refers to your letter dated January 23, 1986 stating that you are engaged in the manufacture of plastic containers for Star Margarine products of Procter & Gamble-PMC; that you also manufacture snap caps and measuring scoop for milk for Wyeth-Suaco Laboratories, Inc., and that your customers are the ones who provide their own designs and specifications for their products, samples of which are enclosed herewith. Based on the foregoing, you now request a ruling as to the rate of percentage tax you are going to pay for your products. In reply, please be informed that Section 6 of Revenue Regulations No. 5-86 provides that in general, materials, parts and accessories of articles subject to sales tax on original sale shall be subject to the same rate as the finished article: Provided, that materials, parts and accessories of articles classified as essential articles which are taxable at 10% under Section 165(A)(3) of the Tax Code, shall be taxed at the same rate as the finished product, only if such materials, parts and accessories can only be used in the manufacture of an article taxable at 10%. Accordingly, inasmuch as butter substitutes like Star Margarine and milk are classified as essential articles taxable at the rate of 10% the containers, snap caps and measuring scoop which you manufacture and are exclusively used as part and accessory of said products, are also subject to the same rate of sales tax, i.e., 10%. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner