Taxes Due on the Purchase Through Bidding Goods from the Auction Division of the Bureau of Customs

August 8, 1988 BIR RULING NO. 370-88 101 (a) 000-00 370-88 Gentlemen : This refers to your letter dated July 27, 1988 stating that your client, Esquire Trade Center, is presently participating and negotiating to purchase through bidding goods such as, but not limited to Electronic Equipment, parts and supplies, watches and other items from the Auction Division of the Bureau of Customs. You now request a ruling as to the kind of taxes due on such transaction and the basis of the computation thereof. In reply, please be informed that pursuant to Section 101(a) of the Tax Code, as amended by Executive Order No. 273, a value-added tax equivalent to 10% shall be levied, assessed and collected on every importation of goods, the tax to be paid by the importer prior to the release of such goods from customs custody. Under RA No. 2704, where the imported goods are sold, transferred or indorsed before their release from customs custody, the transferee and/or indorsee shall pay in full the advance sales tax (now value-added tax) regardless of the status of the original importer and the indorsee or transferee. Such being the case, your client shall be the one liable to the value-added tax in case it shall be the winning bidder in the auction sale to be conducted by the Auction Division of the Bureau of Customs. The 10% value-added tax imposed on the importation of goods is based on the total value used by the Bureau of Customs in determining tariff and customs duty, plus customs duties, excise taxes, if any, and other charges. However, where the customs duties are determined on the basis of the quantity or volume of the goods, the value-added tax shall be based on the landed cost, plus excise taxes, if any. (Sec. 101(a), Tax Code as amended) cdti Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner