10% VAT Impose Don Johnson Baby Lotion

November 29, 1988 BIR RULING NO. 563-88 100 67-041 563-88 Gentlemen : This refers to your letter dated September 29, 1988 requesting in behalf of your client, Johnson & Johnson (Phils.), Inc. for a ruling to the effect that prior to January 1, 1988, your client's manufactured product, Johnson's Baby Lotion, is subject to 10% sales tax and became subject to 10% value-added tax after said date. In reply, please be informed that under BIR Ruling No. 67-041 dated October 23, 1967, this Office ruled that said product is not a toilet preparation but an ordinary article subject to the 7% sales tax under then Section 186 of the Tax Code imposing the sales tax on "other articles". Accordingly, as long as the product manufactured by your client as of January 1, 1988 is the same product which is the subject of the said ruling, said product shall be classified for sales tax purposes, as an ordinary article during the said period. However, under P.D. No. 1358 effective April 21, 1978, the rate of sales tax on said product was increased to 10% pursuant to Section 199 (formerly Section 186). Said Section 199 was amended by P.D. No. 1991 effective January 1, 1986 imposing 20% sales tax on articles not considered semi-essential, essential or agricultural. Although said Section 199 was later amended by P.D. Nos. 1994 and 2006 and later by Executive Order No. 36 renumbering it as Section 163, the rate of sales tax payable for "other articles" remained at 20%. In other words, your client's product, Johnson Baby Lotion is subject to 10% sales tax up to December 31, 1985 but became subject to 20% sales tax from January 1, 1986 up to December 31, 1987. cdti Upon the effectivity of the VAT law on January 1, 1988 which replaced the sales tax provisions of the Tax Code, among others, said Johnson Baby Lotion becomes subject to 10% value-added tax, pursuant to Section 100 thereof. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner