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

November 12, 1981 BIR RULING NO. 226-81 199-00 000-76 226-81 Mrs. Anunciacion L. Yap People Bake Shop 1014 C. Padilla St. Mambaling, Cebu City M a d a m : This refers to your letter dated July 20, 1978 requesting tax exemption under the provisions of the NACIDA law. Investigation disclosed that you are engaged in the manufacture of bread and biscuits; that you started business operation on September 1, 1977 with a capital investment of P5,000.00; and that you are registered with the NACIDA under Certificate of Registration No. 05883 dated August 31, 1977. In reply, I regret to inform you that your request cannot be granted for the reason that the manufacture of bread 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 bread cannot be classified as food preservation. Accordingly, 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 the 10% sales tax prescribed in Section 199 of the same Code. aisadc Very truly yours, RUBEN B. ANCHETA Acting Commissioner