Sales Tax Exemption Granted to American Rubber Company

March 16, 1959 BIR RULING NO. 151-59 1st Indorsement Returned to the Chief, Business Tax Division, thru the Revenue Operations Executive (Assessment), Bureau of Internal Revenue, Manila, the entire docket covering the internal revenue case of the AMERICAN RUBBER COMPANY, involving the sum of P41,801.16 representing deficiency sales tax, surcharge and penalty with the information that the question of taxability or nontaxability of the export sales involved in the instant case should be determined in the light of the provision of Republic Act No. 894 which took effect on June 20, 1953, it appearing that the transactions involved, took place during the period from July 8, 1953 to September 12, 1955. After the amendment of Section 186 by Republic Act No. 894, all exportations of articles classified under Section 186 of the Tax Code by the manufacturer or producer, irrespective of any shipping arrangement which may influence or determine the transfer of ownership of the articles exported, are exempt from the sales tax. The aforesaid law is designed to operate prospectively. Therefore, it exempts from taxation only the export sales of logs and lumber had on and after June 20, 1953, the date of effectivity of said Act. The records of this case show that the exportations of logs and lumber in the instant case took place during the period from July 8, 1953 to September 12, 1955 or after the effectivity of Republic Act No. 894. Consequently, pursuant to the same Act, the sales of the American Rubber Company to Iwai and Company Ltd., Japan during the period aforestated are exempt from the sales tax. (SGD.) JOSE ARAAS Commissioner of Internal Revenue