Importation of Automobiles in Completely Knocked Down Condition

April 27, 1959 BIR RULING NO. 230-59 Mr. Antonio P. Barredo Attorney & Counselor-at-Law Rooms 26-28 Metropolitan Theater Building M a n i l a S i r : This is with reference to your request for reconsideration of the ruling of this Office subjecting to 50% compensating tax the importation of your client, Golden Taxicab, of automobiles in completely knocked down condition. We have carefully analyzed your arguments and the law involved, but we regret to inform you that this Office is not inclined to modify the ruling in question. The proviso in section 184 of the Tax Code reading "Provided, however, That parts and accessories of automobiles imported . . . as completely knocked down parts for the assembly of automobiles shall be subject to tax under section one hundred and eighty-six", clearly indicates that the law refers to those parts and accessories imported by those engaged in the business of assembling them into finished automobiles for sale to the public. In other words, only automobile manufacturers or car assemblers come within the purview of the aforequoted proviso, and the obvious reason for imposing upon them a lower rate of tax than that imposed upon other importers of such parts and accessories is to encourage the manufacture or assembling of automobiles in the Philippines, which industry will provide a wide field of employment and thus ease the employment problem of the country. In view of the foregoing, it will be appreciated if you can advise your client to pay the deficiency tax on the importation in question in order that this Office may not find it necessary to enforce the collection thereof thru the summary remedies provided for by law or to take steps toward the forfeiture of the bond filed by it to guarantee the payment of the tax. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue