BIR Ruling [DA-025-05]

January 21, 2005 BIR RULING [DA-025-05] Sec. 109 (c) VAT Ruling Nos. 077-99; 030-2002 National Center of Excellence for Bee Research and Development University of the Philippines Los Baos College Los Baos, Laguna Attention: Ms. Cleofas R. Cervancia Professor and Coordinator UPLB Bee Program Gentlemen : This refers to your letter dated December 6, 2004 requesting for a ruling that UPLB Bee Program on importation of queen bees is exempt from Value Added Tax (VAT). It is represented that the UPLB Bee Program has been importing queen bees from Hawaii and Australia which are being used for research (breeding) and extension purposes; that the bees produce honey, a valuable food for human consumption ,and other products like pollen, royal jelly, and bee bread which are consumed as dietary supplement; that bees play a major role in pollination and help increase yield of crops requiring out-crossing; and that the breeder queens that you import are being used for the improvement of our local strain. In reply, please be informed that pursuant to Section 109(c) of the Tax Code of 1997, pertinent portions of which are quoted as follows: "Section 109. Exempt Transactions The following shall be exempt from the value-added tax: xxx xxx xxx (c) Sale or importation of agricultural and marine food products in their original state, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption ;and breeding stock and genetic materials therefor. (Emphasis supplied) Products classified under this paragraph and paragraph (a) shall be considered in their original state even if they have undergone the simple processes of preparation or preservation for the market, such as freezing, drying, salting, broiling, roasting, smoking or stripping. Polished and/or husked rice, corn grits, raw cane sugar and molasses, and ordinary salt shall be considered in their original state; xxx xxx xxx." the importation of queen bees is exempt from value-added tax of 10% pursuant to Section 109(c) of the tax Code of 1997. SHCaDA This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group