Distributor of Milk Products is Not Subject to Sales Tax and the Gross Payment for Its Products is Not Subject to Withholding Tax

November 17, 1981 BIR RULING NO. 232-81 201-a 000-00 232-81 Alaska Trading Co., Inc. 5th Floor Corinthian Plaza Paseo de Roxas, Makati Attention: Mr . Antonio Lim General Manager Gentlemen : This refers to your letter dated September 24, 1981, requesting certification to the effect that Alaska Trading Co., Inc. is exempt from the 5% sales tax being withheld by Food Terminal, Inc. pursuant to Republic Act No. 1051 as implemented by Revenue Regulation No. 16-77 and Executive Order No. 651 dated February 16, 1981. cdtech It is represented that your company is the exclusive distributor of milk products manufactured by Holland Milk Products, Inc.; that the latter being the manufacturer is the one liable to pay the 5% sales tax on the said products; and that on your importation of Alaska milk powder included in the sale, you have already paid the corresponding advance sales taxes to the Bureau of Customs at the rate of 10% upon the release from customs custody. In reply, I have the honor to inform you that pursuant to Section 201 of the Tax Code of 1977, there shall be levied, assessed and collected once only on every original sale, barter, exchange and similar transaction either for nominal or valuable consideration, intended to transfer ownership of, or title to, the articles enumerated hereinbelow, a tax equivalent to five (5%) per centum of the gross selling price or gross value in money of the articles so sold, bartered, exchanged, or transferred, such tax to be paid by the manufacturer or producer: a. Locally processed meat, milk, fish and other sea foods. xxx xxx xxx In view thereof and since Alaska Trading Co., Inc. is not the manufacturer nor producer of the products it is distributing, it is not subject to 5% sales tax provided under Section 201 of the Tax Code. Consequently, gross payment for its products by the Food Terminal, Inc. are not subject to the withholding tax of 5% under Republic Act No. 1051 as implemented by Revenue Regulations No. 16-77 and Executive Order No. 651 dated February 16, 1981. As regards your request for tax credit of the total amount of P409,616.22 as alleged taxes withheld from your Manila and Cebu sales by Food Terminal, Inc., the same shall be given due course subject to the provisions of Section 295 of the Tax Code as amended. cdt Very truly yours, RUBEN B. ANCHETA Acting Commissioner