BIR Ruling [DA-055-04]

February 6, 2004 BIR RULING [DA-055-04] 109 (d) VAT Ruling 29-2000 Haibin Commodities Inc. 168 Gen. Luis Street, Kaybiga Kalookan City Attention: Mr. Kenneth Jao Presiden t Gentlemen : This refers to your undated letter requesting for VAT exemption classification which was referred to this Office by Regional Director Nestor S. Valeroso of Revenue Region No. 5, Valenzuela City on March 14, 2003. It is represented that Haibin Commodities, Inc. (Haibin) purchases raw materials such as copra cake, soybean meal, cassava meal, corn meal etc., from local VAT-exempt or non-VAT suppliers and farmers; and that these were dried or heated and later pelletized to produce palatable diet for fish like bangus and tilapia; that some local big suppliers and competitors like Hock Po Feeds, Hi-Pro, Tateh, B-Meg etc., are all exempt from VAT; and you are requesting for VAT exemption for being a small and new player in this industry. In reply, please be informed that the "sale or importation of fertilizers, seeds, seedlings and fingerlings, fish, prawn, livestock and poultry feeds, including ingredients, whether locally produced or imported, used in the manufacture of finished feeds (except specialty feeds for race horses, fighting cocks, aquarium fish, zoo animals and other animals generally considered as pets)" is exempt from VAT. (Section 109 (d) of the Tax Code of 1977). The word "ingredients" or "feed ingredients" is defined under Republic Act No. 1556, as amended by Presidential Decree No. 7, and implemented by Administrative Order No. 35 dated September 23, 1975 as "any single article of food or feeding stuff which enters into the composition of a ration, concentrate, or supplement." Such being the case, your purchases of raw materials such as copra cake, soybean meal, cassava meal, corn meal, etc., from local VAT exempt or non-VAT suppliers and farmers and that these were dried or heated and later palletized to produce palatable diet for fish like bangus and tilapia, are therefore, exempt from VAT. (BIR VAT Ruling No. 029-00 dated August 25, 2000) 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. ACDIcS Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group