VAT Ruling No. 079-89

April 3, 1989 VAT RULING NO. 079-89 Republic Glass Corporation 6th Floor, Republic Glass Bldg. Cor. Tordesillas and Gallaro Sts. Salcedo Village, Makati, Metro Manila Attention: Mr . Agustin P . Perez Vice-President Management Services S i r : This refers to your letter dated Feb. 9, 1988 stating that you are engaged in the manufacture of sheet, figured and tempered glasses that are intended for both local and export markets. In connection with your operation, you request clarification on the following issues related to the applicability of the value-added tax: LibLex 1 You deliver stocks through your own delivery truck or through the facilities of National Trucking Corporation. You bill the customer P700 each trip if your own truck is used or the actual freight charges if the truck of NTC is used. Question: Are the above delivery or freight charges subject to VAT either when billed by you or by your distributors to their customers? Answer: When your own delivery truck is used, the delivery or freight charges that you or your distributors bill are subject to the 10% VAT since they already form part of your gross receipts. When the facilities of the National Trucking Corporation (a freight contractor) are used by you, the amount of freight charged by it is not subject to VAT. However, if you include such amount in your billing to your customers, then it is subject to VAT since it also forms part of gross receipts. 2. Since your product is breakable, you put this in a container (case, pallet or end cap) for which you charge your customers a certain amount of deposit and refund the same upon the return of such container. Question: Are deposits for containers subject to VAT? Answer: Pursuant to Revenue Regulations No. 3-89, deposits for returnable containers are subject to 10% VAT and should be declared in Schedule B-1 of BIR Form No. 2550 (Please refer to attached copy of RR 3-89) 3. Among the raw materials that you use in the manufacture of glass are mineral products like silica and, feldspar and dolomite. Question: Are the above mineral products subject to excise tax or to VAT? Answer: Pursuant to Section 151(a) (2) of the Tax Code as amended by EO 273, your purchase of said mineral products is subject to excise tax on the actual market value of the annual gross output thereof at the time of removal. Moreover, they are also subject to 10% VAT which your seller can pass on to you and be used as an input tax against your output tax. casia Very truly yours, JOSE U. ONG Commissioner of Internal Revenue