Rate of Advance Sales Tax Imposed on Importation of Beverage Flavour Used as Raw Material in Manufacture of Beverages

November 11, 1986 BIR RULING NO. 245-86 163 (2) (c) 220-86 245-86 Gentlemen : This refers to your letter dated October 29, 1986 requesting information as to the correct rate of advance sales tax to be imposed on your importation of ten (10) drums of beverage flavour to be used as raw material in the manufacture of beverages. In reply, please be informed that since beverages and concentrates thereof intended for consumption as a drink are classified as essential articles subject to the 10% sales tax in accordance with Section 163(2)(3) of the Tax Code, as amended, your importation of beverages flavour which is a raw material to be used in the manufacture of the said finished articles is subject to the advance sales tax at the same rate of 10% provided that the purchasers of said commodities shall certify to you as importer that the same shall be used exclusively in the manufacture on preparation of beverages and concentrates thereof. (Sec. 6. (II) (E), Revenue Regulations No. 11-86 dated July 31, 1986). If your purchasers fail to issue the certification, the aforesaid beverage flavours shall be subject to the 20% advance sales tax under Section 163(4) of the Tax Code because it is used in the manufacture of beverages and, therefore, considered as an ordinary article for sales tax purposes. (Sec. 3(c), Revenue Regulations No. 8-84). aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue