Classifying Bread as Essential Article - Tax Rate 5%

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LETTER OF INSTRUCTIONS NO. 1144: Classifying Bread as Essential Article - Tax Rate 5%

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Title Source: Supreme Court: Classifying Bread as Essential Article - Tax Rate 5%

Law: Letter Of Instructions No. 1144

Decision Date: May 25, 1981

President Marcos issues Letter of Instructions No. 1144, classifying bread and ordinary bakery products as essential articles and subjecting them to a 5% sales tax rate to support the viability of the baking industry and ensure affordable bread prices.

Law Summary

Change in Tax Policy and Its Implications on the Baking Industry

Shift from traditional deductibility of raw material costs to a tax credit system adversely affected bakers.
Need to ensure baking industry's viability amid these changes.
Mandate to enable bakers to provide affordable, quality bread products.

Reclassification as Essential Articles Under Section 201(H) of the NIRC

Bread and ordinary bakery products reclassified as essential articles.
Now subject to a reduced sales tax rate of 5% on the gross selling price.
Applies to articles sold, bartered, exchanged, or transferred.

Implementation and Enforcement

Ministry of Finance, through the Bureau of Internal Revenue, tasked to issue implementing rules and regulations.
Repeal or modification of all inconsistent laws, orders, and previous Letter of Instructions.

Immediate Effectivity

The instructions take effect immediately upon issuance.
Ensures timely adaptation and compliance by affected parties.

END