Jute and Polypropylene Bags Used as Packaging Materials of Essential Articles are Subject to 10% Sales Tax

August 3, 1987 BIR RULING NO. 230-87 163 (2) (a) 163 (2) (1) 000-00 230-87 Gentlemen : This refers to your letter dated May 20, 1987 requesting in effect a ruling that your product is subject to 10% original sales tax. It is represented that you are a manufacturer of jute bags and polypropylene bags; and that you sell the manufactured bags to San Miguel Corporation (B-Meg), sugar refineries and sugar mills which use the same as containers and/or packaging materials for poultry feeds, refined sugar and raw sugar, respectively. In reply, please be informed that poultry feeds are considered essential articles subject to 10% sales tax. [Section 163 (2), Tax Code, as amended by Executive Order. No. 36] Accordingly, the jute and polypropylene bags which are used as packaging materials of said essential articles are likewise subject to the same rate of sales tax as the finished product, i.e. 10%, provided the purchaser thereof shall certify to you that the same are exclusively used as packaging materials of said essential article. [Sec. 163 (2)(1), Tax Code, as amended by E.O. No. 36, Sec. 6.11, Rev. Regs. No. 11-86] If the purchaser fails to issue the certification, the jute and polypropylene bags shall be subject to the sales tax of 20%. However, with respect to the refined and raw sugar which are subject to the 3% miller's tax imposed by Section 168 of the Tax Code, the containers and/or packaging materials thereof which you sell to sugar manufacturers are considered ordinary articles subject to 20% sales tax pursuant to Section 163 (4) of the Tax Code as amended. (BIR Ruling No. 220-86) Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner