Tax Imposed on the Importation of Sewing Machine Heads and Stands

September 18, 1958 BIR RULING NO. 527-58 Stewart, Cunanan & Co. 107 13th Street, Port Area P. O. Box No. 2288, Manila Gentlemen : In reply to your letter dated August 20, 1958, I have the honor to inform you that your client, the Singer Sewing Machine Company, for the importation of sewing machine heads and stands which it assembles into finished sewing machines, itself manufacturing the cabinets therefor, is constituted a manufacturer of sewing machines, subject to the fixed and percentage taxes prescribed in Sections 182 and 186 of the Tax Code. The percentage tax is based on the gross selling price of the sewing machines less the cost of raw materials which were previously already subjected to the sales tax. LexLib Your proposition that your client be allowed to invoice only the cabinets on its sales of the machines which will then be the basis of the tax cannot be accepted because it is not in conformity with law. Bona fide discounts which are given to purchasers as a consideration in the sales contract and which are ascertainable at the time of the sales are deductible from the gross selling price for the purpose of the sales tax under the National Internal Revenue Code. Such discount must not be in the nature of rebates or partial remissions of indebtedness. They must be ascertainable and definitely agreed upon by the vendor and the vendee at the time of the sale. They must be actually granted to the vendee. Although not shown in the invoices, they must be accurately shown in credit memoranda, credit notes, or other supporting papers. The invoices on which such discounts are not shown should bear a notation that the prices therein listed are subject to certain agreed discounts. Pursuant to Section 178 of the Tax Code, every retail establishment of your client must be provided with C-14 (manufacturer's) privilege tax-receipt. Should these retail establishments also sell locally purchased products, they must in addition be provided with C-13 privilege tax-receipts. cdll Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue