Importation of Reparation Goods by the Legionnaires Enterprises, Inc.

August 26, 1959 BIR RULING NO. 407-59 The Chairman National Defense Committee Philippine Veteran's Legion Arroceros St., Manila S i r : Reference is made to your letter dated August 24, 1959 requesting information as to the internal revenue taxes due and payable on the importation of reparation goods by the Legionnaires Enterprises, Inc., the so-called business arm of the Philippine Veteran's Legion. It is intimated in your letter that the imported goods will be sold ex-steamer to Filipino merchants upon arrival. prcd In reply thereto, I have the honor to inform you that the importation in question will be subject to an advance sales tax at the rate of 50% to 100% in the case of luxury items, 30% in the case of semi-luxury items, and 7% in the case of ordinary items, pursuant to section 183(b) in relation to sections 184, 185, and 186, all of the Tax Code. The sales tax shall be based on the landed cost of the goods (import invoice value, including freight, postage, insurance, commission, customs duties and all other expenses incurred in connection with the importation before release from customs custody) plus the corresponding mark-up. You further intimated that the Legionnaires Enterprises, Inc. shall sell the goods on the basis of the C.I.F. value. It is stated in this connection, that in the computation of the tax, your actual selling price of the goods shall be disregarded. The amount determined in accordance with the 2nd paragraph hereof shall remain as basis of the tax. As to who shall shoulder the burden of the tax, it may be stated that, as a rule, the importer or the person removing the goods from customs custody is ordinarily liable for the payment thereof. As a matter of fact, the goods cannot be removed from customs custody unless the tax is first paid. If, as further intimated by you, the buyers shall, by agreement, pay the tax, then the latter shall necessarily have to be liable thereto. In such case, you (The Legionnaires Enterprises, Inc.) shall no longer be liable to any tax on the importation. It may be stated further that after payment of the advance sales tax, the imported goods may thereafter be sold to any party and at whatever price without further tax liability. Khaki cloth and bicycle tires are subject only to 7% advance sales tax, and, as stated above, the tax shall be computed on the basis of the landed cost plus 25% mark-up. cdll Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue