Importation of Fibers, Yarns, Chemicals and Dyestuffs is Subject to 10% Sales Tax

July 1, 1987 BIR RULING NO. 185-87 163 (2) (g) 228-86 185-87 Gentlemen : This refers to your letter dated April 30, 1987 requesting in behalf of the following members of that Association, viz: 1. Bentex Textile 2. Century Textile Mills, Inc. 3. Crea Fabrics, Inc. 4. Fabricland Industries 5. Filipinas Textile Mills, Inc. 6. Filtex Manufacturing Corp. 7. Galaxy Tricot Mfg. Corp. 8. Imperial Textile Mills, Inc. 9. Lyon Textile Mills, Inc. 10. Industrial Fiber Products Corp. 11. International Elastic Fabrics Corp. 12. Mabuhay Textile Mills Corp. 13. Marine Pioneers, Inc. 14. Paramount Textile Mills, Inc. 15. Pioneer Texturizing Corp. 16. Oversea Warp Knitting Mills, Inc. 17. S.B. Sales Center 18. Silangan Textile Mfg. Corp. 19. Sunrise Textile Mills Corp. 20. Transworld Knitting Mills, Inc. 21. Universal Robina Mills Corp. 22. Universal Tricot Mills, Inc. 23. Victoria Manufacturing Corp. 24. Yupangco Cotton Mills, Inc. 25. Zenith Textile Mills, Inc. a certification to the effect that their purchase and/or importation of raw materials such as fibers, yarns, chemicals and dyestuffs for the manufacture of textiles intended for clothing is subject to the 10% sales tax only. In reply, please be informed that clothes and textiles intended for clothing are subject to 10% sales tax in accordance with Section 163 (2)(g) of the Tax Code as amended by Executive Order No. 36. Accordingly, the raw materials which are subject to the original sales tax imposed by Section 163 of the Tax Code consisting of fibers, yarns, chemicals and dyestuffs are subject to the same rate of 10%, provided that each and every member of that Association shall certify to the domestic supplier-importer or manufacturer, in case of local purchase, or to this Bureau, in case of direct importation by any of the aforenamed members of that Association, that all of the said raw materials shall be used exclusively in the manufacture of clothes and textiles intended for clothing, which are classified, for sales tax purposes, as essential articles. In case of failure to issue the certification, the raw materials shall be considered as ordinary articles subject to the sales tax at the rate of 20%. adc This will authorize the Bureau of Customs to release to the aforementioned members of the Association their importation of fibers, yarns, chemicals and dyestuffs upon payment of the corresponding 10% sales tax. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner