Tax Liability of a Shoemaker Who Buys His Materials Locally

June 2, 1960 BIR RULING NO. 256-60 Mr. Adriano D. Icasas 2488 Decena Street Pasay City S i r : Reference is made to your letter dated May 16, 1960, propounding the following queries: "Mr. J. Besa is a shoemaker who buys his materials locally. He sells the shoes he makes on the installment plan. "What taxes in he liable to pay? What should be the basis of his monthly percentage tax? The gross sales during the month as shown in his sales book minus the cost of materials used, or should it be the gross collections as shown in his cash receipt book also minus the cost of materials used?" In answer thereto, I have the honor to inform you that Mr. Besa is subject to the fixed and percentage taxes prescribed in sections 182(a)(1) and 186 of the Tax Code. The basis of the percentage tax is the gross selling price of the manufactured shoes sold during the month, minus the total cost of deductible raw materials, and not "the gross collections shown in his cash receipt book minus the cost of materials used". cdta Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue