Method of Computing VAT on Rectified Alcohol Manufactured

April 19, 1988 BIR RULING NO. 156-88 100, 126 000-00 156-88 Gentlemen : This refers to your letter dated February 9, 1988 requesting, in effect, a ruling as to the method of computing the value-added tax on rectified alcohol manufactured thereat and being withdrawn by distillers like Limtuaco and Tanduay under joint bond. You stated that your customers, particularly Limtuaco, are complaining because their withdrawal of alcohol was under bond and you have included in the computation of the 10% value-added tax the specific tax due thereon. It appears that before the implementation of the VAT, the normal practice was that all withdrawals under bond are not required to pay the corresponding specific tax because of the joint bond permit issued by this Office. In reply, please be informed that the excise tax imposed on certain goods is in addition to the value-added tax. (Section 126, Tax Code, as amended by Executive Order No. 273) The 10% value-added tax on the alcohol shall be based on the gross selling price, excluding the VAT. The excise tax or the specific tax, if any, on said alcohol shall form part of the gross selling price. [Sec. 100(d), Tax Code, as amended] Accordingly, even if the withdrawal of the alcohol is under bond, i.e., without the prepayment of the specific tax, still in the computation of the 10% value-added tax due thereon, the gross selling price shall include the specific tax. This is so because under the joint bond filed by the distiller and the rectifier, the latter shall pay the specific tax due on the rectified alcohol. (Sec. 134, Tax Code) Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner