Manufacture of Plastic Containers Sold to Eateries is Subject to 20% Sales Tax

July 2, 1987 BIR RULING NO. 188-87 163 000-00 188-87 Gentlemen : This refers to your letter dated September 26, 1986 stating that you are engaged in the manufacture of plastic containers for some companies engaged in the processing of food products like Magnolia, General Foods, Jollibee, McDonalds and others; and that you want confirmation from this Office to the effect that your plastic containers are subject only to 10% sales tax instead of 20%. In reply, please be informed that ice cream falls under the classification "other processed food products for human consumption" while cottage cheese, sour cream and Magnolia Cream are dairy products and creamers all of which are essential articles subject to 10% sales tax under Section 163(2) of the Tax Code; hence, the plastic containers like gallon, pint and half pint which are exclusively used as containers of said essential articles are also subject to the same rate of sales tax, i.e., 10% provided that the purchasers thereof shall certify to you that the same shall be used exclusively as containers of said essential articles. [Section 163(2), Tax Code, Section 6.11, Rev. Regulations No. 11-86] If the purchasers fail to issue the certification, Vassar Industries, Inc. will be subject to 20% sales tax on its sale of plastic containers for ice cream, cottage cheese, sour cream and Magnolia cream, pursuant to Section 163(4) of the Tax Code. However, Jollibee and McDonalds are engaged in restaurant business subject to 4% caterer's tax under Section 172 of the Tax Code, as amended. Accordingly, the plastic containers which you sell to those eateries are considered ordinary articles subject to 20% sales tax under Section 163(4) thereof. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner