BIR Ruling No. 213-61

May 26, 1961 BIR RULING NO. 213-61 Mr. Leo H. Antonio Imperial Embroidery & Garments Exports (Phil.) Co. Suite 301-302 Trinity Bldg. San Luis St. Ermita, Manila S i r : Reference is made to your letter dated February 17, 1961, addressed to the Chief, Legal Division, Department of Finance which was referred to this Office on April 28, 1961, requesting opinion on the following: "We are a newly organized embroidery and garment firm about to engage in business. We have already established connections in the United States and a few New York firms have signified their intention to ship to us textile materials on consignment for hand and machine sewing into embroidered garments and handkerchiefs which upon completion, we are under obligation to re-export to them. It is clear that our proposed contract is simply to supply then the labor for the manufacture of their garments. We shall be paid either in U.S. Dollars or in goods. May we kindly seek the benefit of your advise as to what taxes, (customs and internal revenue) we shall be made to pay. What will be the basis of the tax, or to put it more plainly, will the tax be computed against the value of our labor contract or against the value of the goods consigned to us." In answer thereto, I have the honor to inform you that pursuant to Section 191 of the Tax Code as amended by Republic Act No. 2072, said business is not subject to any form of business tax. It is understood, however, that the net income and gross receipts to be derived from said business are subject, in proper cases, to the income and additional residence taxes. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue