Advance Sales Tax Rate on Importation of Raw/Packaging Materials for Making of Pharmaceutical and Infant Milk Products

November 20, 1986 BIR RULING NO. 257-86 163 (2) 000-00 257-86 Gentlemen : This refers to your letter dated August 11, 1986 requesting a ruling on the correct rate of advance sales tax to be imposed on your importation of various raw and packaging materials to be used in the manufacture of pharmaceutical and infant milk products. cdta It is represented that you are a manufacturer of Infant Milk Formula and Pharmaceutical products, as follows: A. Infant Milk Formula 1. S-26 2. SMA 3. Bonna 4. Nursoy 5. Promil B. Pharmaceuticals 1. Antibiotics (Wyeth Ominipen, Vipicil, Penadur, Vigopen, Wyamox) 2. Cough/colds (Phenalyn) 3. Anti-diarrhea (Polymagma, Streptomagma) 4. Antacids (Mucaine, Simeco, Amphojel) 5. Analgesic (Zactirin) 6. Sedative (Ativan, Serax) 7. Eye wash (Serax) 8. Arthritis (Ramodar) and that you have certified that the imported raw materials listed in the tabulation attached to your letter are to be used exclusively in the manufacture and preparation of the aforesaid pharmaceutical and infant milk products for sale. In reply, please be informed that the aforesaid infant milk and pharmaceutical products are essential articles subject to the sales tax at the rate of 10%. (Sec. 163(2)(b) and (h), Tax Code, as amended by Executive Order No. 36). The raw materials used in the manufacture or preparation of the said essential articles shall be taxed at the same rate as the finished products provided that the importer shall certify to this Office that the imported articles shall be used exclusively in the manufacture or preparation of said essential articles subject to tax at 10% (Sec. 6.11), Revenue Regulations No. 11-86). Accordingly, and in line with your aforestated certification, your importation of the raw materials of the aforesaid products is subject to the advance sales tax at the same rate or 10% based on the total value used by the Bureau of Customs in determining tariff and customs duties, including customs duties and other charges, pursuant to Section 162(c) in relation to Section 168(2), both of the Tax Code, as amended by Executive Order No. 36, which took effect on August 1, 1986. cdti Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue