Tax Liability of a Sawmill Operator who is at the Same Time a Holder of an Ordinary Timber License

October 19, 1960 BIR RULING NO. 458-60 The Regional Director B.I.R Regional District No. 2 San Fernando, Pampanga S i r : In reply to your letter dated October 12, 1960, I have the honor to inform you as follows: 1 A sawmill operator who is at the same time a holder of an ordinary timber license is subject to the 7% sales tax on his gross sales of lumber produced by his sawmill. 2 A sawmill operator who is not a holder of an ordinary timber license but only buys logs to be sawn into lumber is subject to the 7% sales tax, said tax to be computed on thirty-three and one third per centum of the gross cost of logs purchased, including freight, insurance and similar charges incurred up to the delivery of logs to the mill site. 3 In the case of a sawmill operator who merely buys the logs to be sawn into lumber, the proceeds from the sale of slabs, side edgings, firewood and other lumber by-products is exempt from the 7% sales tax inasmuch as these lumber by-products have already been taxed as part of the logs sold by the concessionaire to the sawmill operator. However, in the case of a sawmill operator who is also a holder of an ordinary timber license, the proceeds from the sale of slabs, side edgings, firewood and other lumber by-products is subject to the 7% sales tax prescribed in section 186 of the National Internal Revenue Code. Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue