Method of Determining the 15% Ad Valorem Tax

October 4, 1988 BIR RULING NO. 473-88 127-00 000-00 473-88 Gentlemen : This refers to your letter dated August 9, 1988, stating that you are a manufacturer of native cigarette which is subject to 15% ad valorem tax. Based thereon, you now request for a ruling as to which of the two methods indicated hereunder is the correct method of determining the 15% ad valorem tax given a final selling price (including VAT) of P44.00: 1) With VAT: P44.00 x 15% = P6.60 ad valorem tax 2.) Without VAT: P44.00 x 1/11 = P 4.00 VAT P44.00 P4.00 = P40.00 Price without VAT P40.00 x 15% = P 6.00 ad valorem tax In reply, please be informed that illustration No. 2 is the correct computation pursuant to Section 172(b) of the Tax Code, as amended by Executive Order No. 273 stating: "(b) Determination of gross selling price of goods subject to ad valorem tax. Unless otherwise provided, the price, excluding the Value-Added Tax at which the goods are sold at wholesale in the place of production or through their sales agent to the public shall constitute the gross selling price." cdt Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner