Paints and Inks Used as Raw Materials n the Manufacture of Packaging Materials is Subject to 10% Sales Tax

July 16, 1987 BIR RULING NO. 208-87 162 (c) 163 (2) 65-86 08-87 Gentlemen : This refers to your letter dated May 13, 1987 stating that your client, The Ault & Wiborg Company (Far East) is engaged in the manufacture of paints and inks; that the same are used as raw materials in the manufacture of packaging materials for essential articles such as food, pharmaceuticals and detergents; and that, as supplier of said raw materials your client is subject only to 10% sales tax. In reply, please be informed that the paints and inks which are used as raw materials in the manufacture of packaging materials for essential articles such as food, pharmaceuticals and detergents are also subject to the same rate of 10%, under Section 163(2) of the Tax Code, as amended by Executive Order No. 36 provided that the purchasers thereof, shall certify to your client that the same shall be used exclusively in the manufacture of packaging materials for food, pharmaceuticals and detergents. (Section 6.11, Revenue Regulation No. 11-86). If the purchasers fail to issue the certification, you will be subject to 20% sales tax. (BIR Ruling No. 165-86). As to question No. 2, raw materials which are in turn used in the manufacture of paints and inks for the purpose as abovementioned, are, if locally purchased also subject to the same rate of 10% under Section 163(2) of the Tax Code, as amended by Executive Order No. 36 provided that your client shall certify to the manufacturer of the raw materials that said raw materials shall be used in the manufacture of paints and inks which you will sell to manufacturer of packaging materials to be used in packing essential articles. However, if imported , such raw materials are subject to 10% advance sales tax based on the total value used by the Bureau of Customs in determining tariff and customs duties, including customs duties, and other charges, pursuant to Section 162(c) in relation to Section 163(2) of the Tax Code, as amended by Executive Order No. 36 which took effect August 1, 1986 provided you certify to this Bureau that said raw materials shall be used exclusively in the manufacture of the products aforesaid. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner