Payment of Advance Sales Tax on Imported Goods

July 28, 1959 BIR RULING NO. 381-59 Mr. Lucas S. Peregrino 1979-C Leveriza Street Pasay City S i r : Pursuant to section 183(b) of the National Internal Revenue Code, the advance sales tax on imported goods must be paid prior to its release from customs' custody, based on the import invoice value thereof, including freight, postage, insurance, commission, customs duty, and all similar charges plus the corresponding mark-up. In interpreting the scope of the phrase "all similar charges", our Supreme Court in the case of Genato Commercial Company, G.R. No. L-11727, held that the intention of the law is to include all charges that maybe paid by the importer to bring the importation into the country. In other words, all items of expense that may be incurred by the importer in effecting the importation into the country and which would necessarily increase the landed cost must be deemed included in the phrase "all similar charges" mentioned in the law. Accordingly, bank charges on the extension of letters of credit and other charges that might be incurred in the realization of the shipment will form part of the landed costs. However, expenses incurred after the release of the goods from customs' custody, such as transportation expenses from customs premises to the importers' bodegas, do not form part of the landed cost. The privilege of shifting the sales tax to the customer by merely annotating on the sales invoice the words "tax included" is no longer allowed. (Connell Bros. v. Coll., C.T.A. Case No. 357) In order that this privilege may be enjoyed, the tax must be billed as a separate item on the sales invoice. aisadc Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue