Imported Raw Materials are Subject to 25% Advance Sales Tax

December 24, 1981 BIR RULING NO. 277-81 197-II 000-00 277-81 Electronic Components, Inc. 4 Pioneer Street Mandaluyong, Metro Manila Attention: Atty . E . C . Halili Gentlemen : This refers to your letter dated November 21, 1980, requesting for a ruling allowing you to pay only 10% advance sales tax on the imported raw materials needed in your manufacture of electronic components and parts. It is represented that you are a BOI-registered enterprise on a pioneer status under the Investment Incentives Act (R.A. No. 5186) engaged in the manufacture of electronic components and parts, particularly tuners for B/W televisions; and that the raw materials/parts needed for the manufacture of said articles are being imported. You also alleged that the tax eventually imposed on manufactured parts is only 10%; that imposition of a higher tax on the imported raw materials will result in your endless claim for tax credit; that if your above-stated request would be granted, it will help lessen the high cost of financing you are presently experiencing for the reason that you can utilize the funds instead of being tied up to the payment of what you believe is creditable advance sales tax; and finally, that it will simplify your commutation of the amount of tax credit for purposes of filing and investigation of your quarterly percentage tax returns. In reply, I have the honor to inform you that your request cannot be granted, since said imported raw materials are subject to the 25% advance sales tax (Sec. 197, II, Tax Code). As regards your allegation that the imposition of a higher tax will result in your endless claim for tax credit, it may be stated that you may apply your excess tax credits only against your advance sales tax liabilities for the succeeding quarter or quarters, upon compliance with the rules and regulations promulgated by the Ministry of Finance under Ministry Order No. 19-79 dated May 18, 1979. Very truly yours, RUBEN B. ANCHETA Acting Commissioner