Amending Revenue Regulations No. 3-70; Revenue Memorandum Circular No. 4-65 and General Circular No. V-338

May 13, 1971 REVENUE REGULATIONS NO. 01-71 SUBJECT : Amending Revenue Regulations No. 3-70; Revenue Memorandum Circular No. 4-65 and General Circular No. V-338 TO : All Internal Revenue Officers and others concerned Pursuant to the provisions of Section 338, in relation to Sections 185, 185-A and 185-B of the National Internal Revenue Code, the following regulations are hereby promulgated: SECTION 1. Purpose and Scope . The purpose of these regulations is to secure an objective and authoritative determination of whether products sought to be classified as locally manufactured, or as integrated or non-integrated articles, qualify as locally manufactured within the purview of subsections (g), (h), (i), (o), (p) and (r) of Section 185, as implemented by Revenue Regulations No. 3-70, dated December 1, 1970, or within the purview of Section 185-B, as implemented by Revenue Memorandum Circular No. 4-65, dated December 1, 1964; or as integrated or non-integrated article within the purview of Section 185-A, as implemented by General Circular No. V-338, dated September 12, 1961. To attain said purpose, the assistance of the Board of Investments, which has the personnel with technical know-how, has been solicited. Accordingly, these regulations amend the procedures provided for in Revenue Regulations No. 3-70, Revenue Memorandum Circular No. 4-65, and General Circular No. V-338. SECTION 2. Procedure . A manufacturer seeking classification of his product as a locally manufactured article, or as an integrated or non-integrated article, shall file with the Commissioner of Internal Revenue a written application therefor, which should be in quadruplicate, stating among others, the following: aisa dc (1) Name and address of the manufacturer; (2) Location of the factory or the manufacturing plant; (3) The article being manufactured and the classification sought for said article (whether as locally manufactured, or as integrated or non-integrated); (4) The components and parts of the article he is manufacturing and the raw materials used in the manufacture thereof; (5) The materials, components, and/or parts, he purchases from local manufacturers or dealers in locally manufactured materials, components and/or parts, and the names and addresses of said local manufacturers and dealers; (6) The materials, components and/or parts which he imports from abroad and/or purchases from importers of, and dealers in such imported materials, components and/or parts, and the names and addresses of said importers and dealers; (7) The machinery and equipment used by him in the manufacture of the article or articles; (8) A description of how the article, components and/or parts of said article are manufactured, attaching to his application the plans and sketches showing the detail of the manufacturing process. Upon receipt of the application, the Commissioner of Internal Revenue shall forward two copies thereof to the Board of Investments, requesting said Board to determine whether the product of the applicant qualifies as a locally manufactured article within the purview of Revenue Regulations No. 3-70, if the article is one of those mentioned in subsection (g), (h), (i), (o), (p) and (r) of Section 185, or within the purview of Revenue Memorandum Circular No. 4-65, if the article is one of those mentioned in Section 185-B; or whether the product is an integrated or non-integrated article within the purview of Section 185-A, as implemented by General Circular No. V-338. He shall further request said Board to issue the corresponding certification if the article sought to be classified as locally manufactured, or as an integrated or non-integrated article, is found to qualify under the category applied for. SECTION 3. BOI certification a condition precedent to qualification of article manufactured or as integrated or non-integrated . No article shall be classified as locally manufactured, or as integrated or non-integrated, without the following required certification from the Board of Investments: A. If the article sought to be classified as locally manufactured, taxable at the rate of 7% only, is one of those mentioned in subsection (h), (i), (o), or (r) of Section 185 the certification should attest that at least eighty per centum of the total quantity of the components or parts used in the manufacture of the finished article are made or produced in the Philippines. However, in the case of phonograph records, firearms, cartridges and other forms of ammunitions and textiles, such certification is not required, it being sufficient that the Board of Investments certify that the said articles are made or produced in the Philippines. B. If the article sought to be classified as locally manufactured, taxable at the rate of 7% only, is one of those mentioned in Section 185-B, the certification should attest that the following parts 1. printed circuit boards; 2. transformers; 3. coils, except yoke and flyback, and sheet metalware attached thereto, except the mask; 4. cabinets; and 5. chassis are manufactured by the manufacturer of the finished article or purchased from other local manufacturers, in accordance with the requirements of Section 185-B, as implemented by Revenue Memorandum Circular No. 4-65 dated December 1, 1964. C. If the article is sought to be classified as integrated, within the purview of Section 185-A, taxable at the rate of 7% only, the certification should attest that not less than eighty per centum of the total quantity, including the compressor unit, if any, of all the intermediate components and parts of the finished article are manufactured by and within the manufacturing enterprise of the manufacturer of the said article. If the article is sought to be classified as non-integrated, taxable at the rate of 15% only, the certification should attest that not less than fifty per centum of the total quantity of all the intermediate components or parts used in the manufacture of the finished article are manufactured by and within the manufacturing enterprise of the manufacturer of the said article. aisa dc SECTION 4. BOI certification required in releases of imported raw materials, parts and/or components sought to be taxed at lower rates . The release of imported raw materials, parts and/or components of article taxable under Sections 185, 185-A and 185-B, upon payment of the lower rates of tax provided for in said sections, shall not be authorized unless the application for such release is accompanied by the certification required in Section 4 hereof. SECTION 5. Amendatory effect . Provisions of Revenue Regulations No. 3-70 dated December 1, 1970, Revenue Memorandum Circular No. 4-65 dated December 1, 1964, and General Circular No. V-338 dated September 12, 1961, which are inconsistent with the provisions of these regulations are accordingly amended. SECTION 6. Effectivity . These regulations shall take effect fifteen (15) days after publication in the Official Gazette. CESAR VIRATA Secretary of Finance Recommended by: MISAEL P. VERA Commissioner of Internal Revenue ANNEX 1st Indorsement May 25, 1971 Respectfully returned to the Commissioner of Internal Revenue, Manila, duly approved, the enclosed Revenue Regulation No. 1-71, dated February 13, 1971. The Chairman of the Board of Investments and the Acting Commissioner of Customs were furnished by this Office copies of the Regulation as their Offices are involved in its implementation. cdt CESAR VIRATA Secretary