VAT Replacement on the Assessed and Collected Importation of Goods by a Domestic Manufacturer

November 15, 1988 BIR RULING NO. 543-88 104-00 000-00 543-88 Gentlemen : This refers to your letter dated October 4, 1988 requesting confirmation that the value-added tax assessed and collected on the importation of goods by a domestic manufacturer is a replacement of sales tax; and that any previous, references to its sales tax liability should now apply to the value-added tax. In reply, please be informed that the value-added tax is a replacement of the various percentage taxes prescribed in the Tax Code, e.g., sales, advance and compensating tax, which were paid by the manufacturer, producer, or importer, prior to the implementation of the value-added tax law. (Executive Order No. 273) effective January 1, 1988. Accordingly, any reference to the sales taxes should now apply to value-added tax. As to the implication of the tax crediting privileges of sales, compensating, and specific taxes on imported raw materials and supplies by the domestic manufacturers supplying to government projects pursuant to Executive Order No. 765, please be informed that the same has been withdrawn by Executive Order No. 93 effective March 10, 1987. Such being the case, any reference of tax crediting privilege for the value-added tax effective January 1, 1988 on imported raw materials or supplies used by a domestic manufacturer shall no longer apply. Pursuant to Section 104 of the Tax Code, however, the domestic manufacturer who is liable to VAT on its importation of raw materials, supplies and other taxable articles is allowed to claim as input VAT the VAT element on the imported raw materials or supplies against its output VAT on the sale of finished goods. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner