Collection of Compensating Taxes on the Sales of Tax-Free Articles (PX Goods) to Non-Exempt Private Persons or Entities

December 26, 1973 REVENUE MEMORANDUM CIRCULAR NO. 72-73 SUBJECT : Collection of Compensating Taxes on the Sales of Tax-Free Articles (PX Goods) to Non-Exempt Private Persons or Entities TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, there is quoted hereunder a copy of the memorandum of the Honorable, the Secretary of Finance dated November 17, 1973. "In consultation with the Governor of the Central Bank of the Philippines and the Monetary Board, I requested their decision on whether we should consider PX goods as prohibited imports or whether we should tax any of such goods sold to the third parties. In their opinion it would be better if the government collected the corresponding duties and compensating taxes on goods sold by beneficiaries of PX privileges to the general public." Section 183(b) provides that in case of tax-free articles brought or imported into the Philippines by persons, entities or agencies exempt from tax which are subsequently sold, transferred, or exchanged in the Philippines to non-exempt private persons or entities, the purchasers shall be considered the importers thereof. The tax due on such articles shall constitute a lien on the article itself superior to all other charges or liens, irrespective of the possessor thereof. In view of the effect of this smuggling of PX goods on the revenues of the government as well as the unfair competition against legitimate Philippine-produced goods, all officials concerned are hereby instructed to conduct extensive campaign to collect the legitimate taxes arising from the flagrant sale of these untaxed goods. All Regional Officers are hereby required to submit reports of action they have taken towards the implementation of the provisions of this Circular. cdta MISAEL P. VERA Commissioner of Internal Revenue