Business tax Liability of the Business of Processing of Marble, Buys and Sells Marble Blocks for Local and Foreign Markets

December 26, 1988 BIR RULING NO. 597-88 100 (a); 102 (a); 151 (a) (c) 000-00 597-88 Gentlemen : This refers to your letter dated October 17, 1988 requesting opinion as to your business tax liability. It appears that you deal in the processing of marble, buys and sells marble blocks for local and foreign markets and operates in the following manner: "1. We buy our marble blocks from quarries mainly in Doa Remedios Trinidad, Bulacan, and pay the quarry owners P100.00 per cubic meter. "2. Another party does the quarrying operation to whom we pay P1,000.00 more or less per cubic meter of cut size marble blocks depending on sizes and quality. "3. The cut-size blocks are transported to our yard/plant in Meycauayan, for this we pay P300.00 per cubic meter hauling charges. "4. We have special kind of machines that cuts, polishes and forms all kinds of marbles and other stones, we also engage in installing marbles for customers." It appears that you are a VAT-registered company and pays the 10% value-added tax. However, you are still being assessed the 3% excise tax. In reply, please be informed that as a VAT-registered company, your local sales of marble blocks is subject to 10% value-added tax while your export sales is subject to 0% pursuant to Section 100(a) of the Tax Code, as amended by Executive Order No. 273. For rendering services to your customers by cutting, polishing and installing materials and other stones, you are considered engaged in the sale of services hence, subject to another 10% value-added tax under Section 102(a) of the same Code. As regards your liability to the 3% excise tax imposed on mineral products under Section 151(a)(2) of the Tax Code, it may be stated that excise taxes on domestic products are payable by the manufacturer or producer before removal from the place of production and with respect to minerals or mineral products, the lessee, owner or operator of the mining claim is liable for the payment of the excise tax due thereon. (Sec. 127 and 151(c), Tax Code) Since the marble blocks in questions removed from quarries are the minerals subject to the 3% excise tax and inasmuch as you are neither the manufacturer or producer of said marble blocks nor a lessee, owner or operator of a mining claim, you are not subject to the said 3% excise tax. This ruling is being issued on the basis of the foregoing facts, as presented. However, if upon investigation, it is ascertained that the facts are correct, then this ruling shall remain valid. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner