PVC Used in the Production or Manufacture of Essential Articles are Subject to 10% Sales Tax

June 17, 1987 BIR RULING NO. 167-87 163 (2) (K) 278-86 167-87 Gentlemen : This refers to your letter dated April 9, 1987 requesting confirmation of your opinion that your PVC manufactured products are subject to the 10% sales tax. It is represented that you are engaged in the manufacture of Polyvinyl Chloride Resins (PVC), which are used by your customers as a raw material in the production of (1) pipes and fittings , for water supply, drainage, sewage, irrigation and electrical conduit, and (2) corrugated sheets , for roofing terraces and garage. cdta In reply, please be informed that any article, subject to the original sales tax, when used as raw material in the manufacture or preparation of essential articles, shall, subject to certain conditions, be taxed at the same rate as the finished product, except when such material is taxed at a lower rate. (Section 163(2), Tax Code, as amended by Executive Order No. 36). The pipes and fittings are basic sanitary and plumbing fixtures and fittings while the corrugated sheets for roofing terraces and garage are roofing materials, hence, said finished articles are considered essential articles under Section 163 (2)(k) of the Tax Code, as amended by Executive Order No. 36. Accordingly, your Polyvinyl Chloride Resins (PVC) which are used in the production or manufacture of said essential articles shall be taxed at the same rate of 10%. However, in such a case, the purchasers shall certify to you that the said raw materials shall be used exclusively in the manufacture or preparation of any of the said essential articles. If the purchasers fail to issue the certification, the raw materials shall be considered as non-essential or ordinary articles subject to the 20% sales tax. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner