Publishing Revenue Regulations No. 5-80 dated June 10, 1980, Further Amending Section 6 of Revenue Regulations No. 7-76, as Amended by Revenue Regulations No. 2-80

August 22, 1980 REVENUE MEMORANDUM CIRCULAR NO. 39-80 SUBJECT : Publishing Revenue Regulations No. 5-80 dated June 10, 1980, Further Amending Section 6 of Revenue Regulations No. 7-76, as Amended by Revenue Regulations No. 2-80 TO : For the Information and Guidance of All Concerned, There is Published Hereunder the Full Text of Revenue Regulations No. 7-76, as Amended "Republika Ng Pilipinas Ministri ng Pananalapi KAWANIHAN NG RENTAS INTERNAS Lungsod ng Quezon September 2, 1976 REVENUE REGULATIONS NO. 7-76 Subject : Rules and Regulations Relative to the Purchases and Sales of Tax-Free Articles by the Armed Forces of the Philippines Commissary and Exchange Service. To : All Internal Revenue Officers & Others Concerned Pursuant to the provisions of Section 338 of the National Internal Revenue Code, as amended, in relation to Presidential Decree No. 83 dated December 20, 1972, the following rules and regulations governing the purchases of the Armed Forces of the Philippines Commissary and Exchange Service, hereinafter known as AFPCES, of tax-free articles or commodities from local manufacturers, producers or suppliers, and the sales thereof to persons entitled to commissary and PX privileges under Letter of Instructions No. 31 dated October 23, 1972, are hereby promulgated. A. On Articles Subject to Sales Tax : Sec. 1 . As envisioned in Presidential Decree No. 83, the AFPCES shall be the only agency or unit of the Armed Forces of the Philippines which is authorized to purchase tax-free articles or commodities from local manufacturers, producers or suppliers for sale to persons entitled to commissary or PX privileges under Letter of Instructions No. 31, as amended. Sec. 2 . No purchase order for tax free articles or commodities originating from AFPCES shall be filled by any manufacturer, producer or supplier unless the same is approved by the authorized official of AFPCES whose full name, rank, branch of service and serial number are indicated therein. The identity of the approving official, together with the specimens of his signature shall be furnished the Commissioner of Internal Revenue thru the Indirect Taxes Division. Sec. 3 . In filing out the purchase order, the manufacturer, producer or supplier shall indicate in its invoice the articles or commodities actually sold, the number of units, the gross selling price, the tax due and the net selling price per unit. Each invoice shall be accompanied by a statement showing how the amount of tax due per article was arrived at, certified to as correct by the President, Manager or Comptroller. Sec. 4 . The AFPCES shall submit to the Commissioner of Internal Revenue through the Indirect Taxes Division a bi-monthly report of its purchases. The report shall include a list of the manufacturers, producers or suppliers, a copy of the corresponding sales invoice and the statement of the sales tax due on each article or commodity sold by said manufacturer, producer or supplier, and the corresponding purchase order. Sec. 5 . The manufacturers, producers or suppliers referred to herein shall have a registry book, duly registered with the Bureau of Internal Revenue. All sales made to AFPCES shall be entered in the said registry book not later than the day immediately following the date of the transaction. The book shall be kept and maintained like any ordinary accounting record and shall be opened for inspection at any time during office hours by any duly authorized internal revenue officer. aisa dc Sec. 6 . IN FILING HIS QUARTERLY PERCENTAGE TAX RETURN THE MANUFACTURER OR PRODUCER SELLING ARTICLES OR COMMODITIES TO AFPCES SHALL EXCLUDE FROM HIS TOTAL GROSS SALES SUBJECT TO TAX THE SALES MADE TO AFPCES DURING THE QUARTER. THE TAX FREE SALES TO AFPCES SHALL, HOWEVER, BE INDICATED IN THE RETURN BY MEANS OF A FOOTNOTE, OR AN ATTACHMENT STATING THE AMOUNT OF SALES AND THE PERCENTAGE, SPECIFIC OR MINING TAXES PAID ON THE RAW MATERIALS, PARTS, ACCESSORIES OR OTHER ARTICLES FORMING PART OF THE FINISHED PRODUCT SOLD. ANY PERCENTAGE, SPECIFIC OR MINING TAX PAID ON DOMESTICALLY MANUFACTURED OR IMPORTED RAW MATERIALS, PARTS, ACCESSORIES OR OTHER ARTICLES FORMING PART OF THE FINISHED PRODUCT SOLD TO AFPCES MAY BE CLAIMED AS A TAX CREDIT BY THE MANUFACTURER OR PRODUCER IN ACCORDANCE WITH REVENUE REGULATIONS 8-78. casia B. On Articles Subject to Specific Tax : Sec. 7 . The following articles, when purchased by AFPCES from local manufacturers, compounders, brewers or suppliers, for sale to persons entitled to commissary or PX privileges, shall be exempt from the specific taxes prescribed under Title IV of the National Internal Revenue Code: 1. Tobacco products a. smoking and chewing tobacco b. cigars c. cigarettes 2. Alcoholic beverages a. compounded liquors b. wines and imitation wines c. fermented liquor-beer 3. Matches 4. Petroleum Products Sec. 8 . The commercial labels intended for the above enumerated articles other than petroleum products shall bear the following inscription: cd i "FOR THE EXCLUSIVE USE BY AFP PERSONNEL AND OTHER AUTHORIZED PERSONS UNDER P.D. NO. 83. THE POSSESSION OR USE OF THESE ARTICLES BY UNAUTHORIZED PERSONS IS PROHIBITED BY LAW." In the event that the size and/or existing design of the commercial labels being used for the articles concerned would not allow the printing of the inscription as herein required without disfiguring the usual appearance of those labels, the said inscription may be printed on a separate secondary label to be affixed on a conspicuous side of the pack, package, box, bottle or other form of container of the said articles. The color of the crowns or bottle caps of fermented liquor and other alcoholic beverages sold to AFPCES shall be different from the color of the crowns or caps being used on tax-paid products of the same kind. Moreover, the said bottle caps shall bear the inscription "AFP-TAX-FREE" in bold letters printed or engraved on the top or on the side of the cap or crown. acd Sec. 9 . The requirement of affixing strip stamps or auxiliary labels on containers of all the aforesaid articles is hereby waived or dispensed with. In lieu thereof, strips of paper of the same size or dimension as that of the regular strip stamps for locally manufactured cigarettes and other tobacco products and of the regular auxiliary labels for wines and liquors shall be used for affixture to packs of cigarettes, box of cigars or packages of smoking or chewing tobacco and to bottles of wines, imitation wines and compounded liquor to be sold to AFPCES or its authorized post exchanges. These substitute strips or labels shall have a different color and shall bear the inscription, "For the Exclusive Use by the AFP Personnel and Other Authorized Persons Under P.D. No. 83." Sec. 10 . The substitute strips or labels referred to in the preceding section shall be placed in the custody and control of the Accountable Forms Division of the Bureau of Internal Revenue. The issuance thereof in favor of manufacturers of cigarettes and other tobacco products, wines, imitation wines and compounded liquors shall be effected in accordance with the written request of AFPCES. cd i Sec. 11 . Manufacturers of cigarettes and other tobacco products, wines, imitation wines and compounded liquors intending to sell tax-free products to the AFP Commissary & Exchange Service or its authorized post exchanges shall turn over their stocks of printed paper strips to be used in lieu of strip stamps or auxiliary labels to the revenue officers assigned in their respective establishments who in turn shall assume the responsibility of safekeeping, issuance and proper recording thereof on a day-to-day basis. The manufacturer, compounder, brewer or supplier concerned shall request the revenue officer assigned in his establishment to issue the requisitioned quantity of printed paper strips to fill a purchase order made by the AFPCES or any of its authorized post exchanges. Any paper strip damaged or mutilated in the process of affixture thereof to the packs or bottles of the tax-free articles should be returned to the revenue officer assigned in the establishment for replacement with an equal number of good paper strips. The revenue officer shall make day-to-day entries in a separate record purposely for paper strips in his custody to reflect the following: a. Quantity of paper on hand at the beginning of the day; b. Quantity of paper strips received from the manufacturer; c. Quantity of paper strips issued for affixture during the day; d. Quantity of damaged paper strips returned by manufacturer and replaced with an equal quantity good ones; and e. Quantity of paper strips on hand at the end of the day. A monthly resume of above data shall be submitted by the revenue officer together with the manufacturer's transcript of official register books on or before the 8th day of the succeeding month. Each copy of the invoice and/or other related shipping paper shall bear the signature of the revenue officer assigned in the establishment who is required to verify the articles listed thereon to determine their correct quantity and description and the manufacturer's compliance with existing revenue laws and regulations. Sec. 11-A . Purchases by AFPCES of petroleum products on a tax-free basis shall be allowed only after a copy of the supply contract entered into with a local oil company is submitted to the Commissioner of Internal Revenue thru the Gasoline & Miscellaneous Tax Division on or before January 1 of every year, together with a list of persons entitled to commissary and PX privileges and indicating, if any, the vehicles registered in their names, the make of vehicles and the corresponding plate numbers. In case the petroleum products sold to AFPCES are tax-paid, a claim may be filed by AFPCES for tax refund or replenishment under Sections 34 and 35 of Revenue Regulations No. 13-77, otherwise known as Petroleum Products Regulations. In case the petroleum products delivered to AFPCES are tax-paid but the purchase price is net of specific tax, the supplier-oil company may file a claim for tax refund, tax credit or replenishment. casia All invoices covering sales by AFPCES of motor fuel and lubricants shall indicate legibly, among others, the name of the purchaser, make of vehicle, plate number, kind and quantity. A copy of the sale invoice shall in all cases accompany the claim for tax refund, tax credit or replenishment filed either by AFPCES or by the supplier-oil company. Sec. 12 . The provision of sections 1, 2, 3, 4 & 5 of these regulations shall apply to purchases by AFPCES from local manufacturers, compounders, brewers or suppliers of articles subject to specific tax, except that in the case of identity of the approving official referred to in section 2, and submission of bi-monthly report of purchases by the AFPCES mentioned in section 5, both of these regulations, the same shall be submitted to the Commissioner of Internal Revenue thru the Manufactured Tobacco Tax Division, Alcohol Tax Division and the Gasoline & Miscellaneous Tax Division, as the case may be. aisa dc Sec. 13 . Any existing regulations, orders, or instructions or portions thereof inconsistent with these regulations are hereby repealed, amended or modified accordingly. Sec. 14 . These regulations shall take effect immediately. (SGD.) CESAR VIRATA Secretary of Finance TAN RECOMMENDED BY: (SGD.) EFREN I. PLANA TAN-1456-040-3" All internal revenue officers and others concerned with the enforcement of internal revenue laws are hereby enjoined to be guided accordingly. TOMAS C. TOLEDO Acting Commissioner of Internal Revenue