Tax Imposed on a Manufacturer of Dried Fish and Fish Sauce

August 7, 1958 BIR RULING NO. 417-58 Mr. Celestino Leano, Jr. 19 Gordon St. San Francisco del Monte Quezon City S i r : In answer to your letter (undated), I have the honor to inform you as follows: A manufacturer of dried fish and fish sauce (patis) is subject to the annual fixed tax of P20.00 and to the 7% sales tax prescribed in Sections 182(A)(1) and 186 of the National Internal Revenue Code. The sales tax is based on the gross selling price of the dried fish and fish sauce, minus the total costs of raw materials used which are subject to the same rate of sales tax. For that purpose, containers, such as boxes and bottles, are considered raw materials. Accordingly, and based on the example given in your letter, the amount subject to the 7% sales tax is P1,400.00, arrived at as follows: Gross selling price of products P1,500.00 Less: Costs of boxes & bottles 100.00 Amount subject to sales tax P1,400.00 ======= The costs of the fish and salt are not deductible because, unlike boxes and bottles, fish and salt are exempt from the 7% sales tax, pursuant to Section 188(b) of the Tax Code, as amended by Republic Act No. 1856. Needless to state, in the conduct of the aforesaid business, you are further subject, in proper cases, to the income and additional residence taxes. cdt Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue