Purchase and/or Importation of Raw Materials for the Manufacture of Textiles Intended for Clothing Subject to Sales Tax

November 17, 1986 BIR RULING NO. 250-86 163 (2) (g) 228-86 250-86 Gentlemen : This refers to your letter dated November 10, 1986 requesting in behalf of another member of that Association, Solid Development Corporation of 1927 J. Bocobo Street, Malate, Manila, a certification to the effect that its purchase and/or importation of raw materials such as fibers, yarns, chemicals and dye-stuffs for the manufacture of textiles intended for clothing be subject only to 10% sales tax. In reply, please be informed that clothes and textiles intended for clothing are subject to 10% sales tax in accordance with Section 163(2)(g) of the Tax Code or amended by Executive Order No. 36. Accordingly, the raw materials which are subject to the original sales tax imposed by Section 163 of the Tax Code consisting of fibers, yarns, chemicals and dyestuff are subject to the same rate of 10%, provided that Solid Development Corporation shall certify to the domestic supplier-importer or manufacturer, in case of local purchase, or to this Bureau, in case of direct importation, that all of the said raw materials shall be used exclusively in the manufacture of clothes and textiles intended for clothing, which are classified, for sales tax purposes, as essential articles. In case of failure to issue the certification, the raw materials shall be considered as ordinary articles subject to the sales tax at the rate of 20%. This will authorize the Bureau of Customs to release to the aforenamed member of that Association its importation of fibers, yarns, chemicals and dyestuffs upon payment of the corresponding 10% advance sales tax. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue