Manufacture of Cakes and Pastries Not a Cottage Industry Under the NACIDA Law, Subject to Fixed Tax and Sales Tax

November 12, 1981 BIR RULING NO. 224-81 199-00 000-76 224-81 Mr. Felipe Labrador Ibabao, Mambaling Cebu City S i r : This refers to your letter dated September 26, 1980 requesting tax exemption under the provisions of the NACIDA's law. Investigation disclosed that you are engaged in the manufacture of cakes and pastries; that you started business operation on May 7, 1980 with a capitalization of P10,000.00; and that you are registered with the NACIDA under Certificate of Registration No. 17417-CVRI dated September 18, 1980. In reply, I regret to inform you that your request cannot be granted for the reason that the manufacture of cakes and pastries is not one of the economic activities included within the term "cottage industry" which activities are enumerated in Section 11 of Republic Act No. 3470, as amended by Republic Act No. 5326 and Presidential Decree No. 817. It may be stated that food preservation is one of the economic activities enumerated in said law. However, the manufacture or baking of cakes and pastries cannot be classified as food preservation. In view thereof, you are subject to the fixed tax of P100.00 imposed in Section 192(1) of the Tax Code of 1977, as amended and to 10% sales tax prescribed in Section 199 of the same Code. Very truly yours, RUBEN B. ANCHETA Acting Commissioner