Establishing a Guideline in the Determination of Sales Tax Applicable to Articles under Section 194 (b) of the Tax Code

January 14, 1985 REVENUE MEMORANDUM CIRCULAR NO. 04-85 SUBJECT : Establishing a Guideline in the Determination of Sales Tax Applicable to Articles under Section 194 (b) of the Tax Code TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, there is established hereunder guidelines in the determination of tax applicable to articles taxed under the provisions of Section 194 (b) of the Tax Code in relation to Revenue Regulations No. 8-84 or the Cosmetic Products Regulations. cd i SECTION 1 . Articles intended to beautify and improve the complexion, hair and skin shall be considered as cosmetic products and therefore, subject to the 50% sales tax such as: 1. Skin Care a) Vanishing Cream Creams used as powder base or a complete beautifier to hide flaws of the skin. b) Skin Lightener/Bleaching Lotion Cosmetic preparations intended for bleaching and skin lightening which functions in several ways such as: 1) Lightening of the skin 2) Reduction in formation of skin pigments 3) Bleaching of relatively fixed pigments. c) Wrinkle Smoother Products which tighten the skin and smoothen the wrinkles. d) Beauty Mask Preparations topically applied, primarily to the face area for the purpose of achieving a tightening sensation with a smoothening and refreshing effect in the areas to which the product is applied. e) Depilatories Products which soften unsightly hair to facilitate removal by wiping or rinsing . cd i f) Bath Oils Products used as beauty bath for dry skin, bath perfume and beauty oil for bath and come in the form of sprays, liquid, dry powder, capsules, towelettes or beads. g) Moisturizing Cream/Lotion Products which soften and smoothen the skin. h) After Shaving Preparations A product intended to cool and refresh the skin, allay irritation, relieve the feeling of tautness and soreness, disinfect and promote healing of the skin which may be damaged during the shaving process. 2. Hair Care a) Hair Setting Lotion Products applied to the hair before setting to prepare it for styling, which to a large extent should remain, even after combing. b) Hair Lacquers/Spray Net Products used for preserving hair style. These are formulated to coat the hair with a film which helps to keep the hair in place. c) Blow-Dry Lotion Products used to improve the colorability and give good anti-static effect so that drying and forming with brush do not excessively strain the hair. d) Hair Tonic Products for hair application, whether medicated or not, that gives a pleasant odor and refreshing effect. e) Hair Perming Lotion Products that give the hair a durable wave or curl and luster. f) Hair Strengthener Products that have the ability to change configuration of the hair from a naturally kinky or wavy hair to a straight one. g) Hair Neutralizer Products which remove the excess waving agent from the hair and restores hair to the original condition thus giving the wave the desired permanence. h) Hair Dyes/Bleaches/Tints Preparations applied to the hair or scalp to restore and/or change the natural color of hair. i) Cold Waving Solution Products that produce permanent waving without the application of heat. They give the hair a durable wave or curl and luster. j) Hairdressing Products other than hair oils and pomades which are intended principally for good grooming, giving the hair a natural healthy appearance and giving luster without greasiness. 3. Make-up a) Foundation Make-up/Face Foundation Products that cover blemishes/flaws on the skin and enhances one's complexion. b) Blush-on/Rouge/Blusher Products used on top of the face powders and/or foundation make-up to highlight the cheeks or give the blushing effect to the wearer . c) Eye Make-up Products designed for use on the areas and parts of the eyes such as the brows, the lids and the lashes. They are classified under the following categories: 1) Eye-shadow intended mainly to create a color effect that would enhance the color of the eyes. 2) Mascara intended mainly to thicken the lashes artificially. 3) Eye Liner impart the desired color to the eyelids and shape it to whatever is desired. 4) Eyebrow Make-up shapes or re-shapes the eyebrows. d) Lip Color/Lipstick/Lip Gloss Products that give color or gloss to the lips. 4. Nail Preparations a) Cuticle Cream Products used primarily to improve the appearance of the nails. It also prevents the nail from becoming brittle and ribbed. b) Nail Bleach Products used to whiten the nail and remove discoloration. cd i c) Enamel Dryer Oily preparations which facilitate faster evaporation of volatile substances in the nail enamel. d) Enamel Remover are suitable solvent for washing away the applied nail enamel. e) Nail Extenders Products also known as nail elongators, are mixtures which when applied over the nail surface produce a film that hardens on drying to simulate the nail. f) Nail Strengtheners Products which promote the hardening of brittle nails. Articles, substances or preparations which are similar or analogous to the above enumerated products shall, likewise, be classified as cosmetic products. The similar or analogous article are those advertised or held out to be suitable for the same purposes mentioned above regardless of the name by which they may be known or distinguished. SECTION 2 . Articles which are used for personal hygiene and health shall be considered as ordinary and, therefore, subject to 10% sales tax such as: 1. a) Cleansing Lotion/Cream Products used for the removal of surface grime, oil and facial make-up, from the face and throat. b) Facial Astringent Lotion Products used for cleansing and to tighten the pores for the correction of the oily skin. c) Hand and Body Lotion/Oil Products used for treating/preventing dry, roughened and irritated skin by forming a smooth , dry continuous, flexible film on the skin and inducing rehydration of the stratum corneum . d) Sunscreen/Suntan Preparations Are creams and lotions which protects the skin from the burning effect of the sun while permitting tanning. e) Facial and Body Powder Powder containing talc and/or starch suitably perfumed, which cools the face and body and keeps the skin dry. Talc, starch and/or chemicals which are used in medicinal preparation should constitute 70% or more of the manufactured articles. f) Hand and Body Liquid Soaps Cleansing preparations based on synthetic detergents with formulations containing more than 5% saponaceous matters. cd g) Hair Shampoo Hair shampoo containing more than 5% saponaceous matters is a preparation of a surfactant or surface active materials which when used under the conditions specified will remove surface grease, dirt and skin debris from the hair shaft and scalp without affecting adversely the hair, scalp or health of the user. h) Hair Conditioner/Hair Treatment Basically treatment products for the hair which lubricate the hair fiber for protection from further damage. i) Brilliantines A type of pomade which replaces/ improves the deficient natural oil of the hair. j) Pre-Shaving Preparations Preparation which aid shaving by facilitating removal of facial hair. k) Deodorants Preparations which mask, remove or decrease perspiration odors, prevent their development or do all these. l) Anti-Perspirant Products with astringent action which inhibit the flow of perspiration. All internal revenue officers are hereby enjoined to give this Circular the widest publicity possible. RUBEN B. ANCHETA Acting Commissioner