Rate of Sales Tax Payable on Sale of Plastic Bags to Manufacturers of Essential Articles

November 19, 1986 BIR RULING NO. 254-86 163 (2) 165-86 254-86 Gentlemen : This refers to your letter dated October 22, 1986 stating that you are a manufacturer of plastic bags selling your products to Nestle Philippines, Inc. and other manufacturers of essential articles; and that you are requesting a ruling as to the rate of sales tax payable by you on your sale of such packaging materials to your aforesaid customers. In reply, please be informed that among the articles subject to 10% sales tax are processed food products for human consumption, processed milk, creamers, dairy products, beverages and concentrates thereof whether in liquid, powder or granulated form intended as consumption for drink, e.g., processed coffee, cocoa or tea. (Section 163(2), Tax Code as amended by Executive Order No. 36). Your packaging materials which are exclusively used as containers of essential articles like the above which are manufactured by Nestle Phils., Inc. and other manufacturers of essential articles who are your customers, are also subject to the same rate of sales tax, i.e., 10% provided that the purchasers thereof shall certify that the same shall be used exclusively as containers of said essential articles. (Section 163(2), Tax Code as amended, Section 6.II, Revenue Regulations No. 11-86). If the purchasers fail to issue the certification, you will be subject to 20% sales tax, pursuant to Section 163(4) of the Tax Code. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue