Taxability of Denatured Alcohol for External Use

December 15, 1988 BIR RULING NO. 578-88 100 (a) 131-00 000-00 578-88 Gentlemen : This refers to your letter dated October 28, 1988 requesting a ruling on the taxability of denatured alcohol for external use. In reply, please be informed that said denatured alcohol for external use, i.e., rendered unfit for oral intake, of not less than 180 degrees proof (ninety percent absolute alcohol), is exempt from the specific tax prescribed by Section 138 of the Tax Code. (Sec. 131, Tax Code, as amended by Executive Order No. 273) If said denatured alcohol is used for motive power, the same shall be subject to specific tax at the rate of five centavos per liter of volume capacity. If the denatured alcohol is mixed with gasoline the excise tax on which has already been paid, only the alcohol content shall be subject to the specific tax. (Sec. 145(a)(4), Tax Code) However, said denatured alcohol which is exempt from the specific tax is subject to the 10% value-added tax, pursuant to Section 100(a) of the Tax Code. Likewise, said denatured alcohol used for motive power is subject to the 10% VAT, pursuant to Section 126 of the same Code. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner