Excise Tax Imposed on Certain Goods is in Addition to VAT

April 28, 1988 BIR RULING NO. 166-88 100, 126 000-00 166-88 Gentlemen : This refers to your letter dated April 5, 1986 supplementing your letter dated March 4, 1988, stating that you are engaged, among others, in the sale of 1880 alcohol at P10.00/liter; and that you transact on a sale-under-bond basis wherein the buyer withdraws alcohol under bond and pays the specific tax of P7.52 per liter. You are of the opinion that you need to pay VAT only on the basis of the selling price of P10.00 and not on the basis of the selling price plus percentage tax; otherwise your invoice price will be P11.75 and the customers will complain that since they are allowed 1/11 of the selling price, there might be difficulty in availing fully the tax credit of P1.75. In reply, please be informed that as earlier explained in our letter dated February 22, 1988, 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. [Section 100(d), Tax Code as amended] Accordingly, even if the withdrawal of the alcohol is under bond, i.e., without 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. (Section 134, Tax Code. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner