Ms. Linaflor J. Delos Santos

April 17, 2007 BIR RULING [DA-242-07] R.R. 16-2005 Ms. Linaflor J. Delos Santos 736 N. Padilla St. San Miguel, Manila M a d a m : This refers to your letter dated January 31, 2007 indorsed to this Office by Regional Director Alfredo V. Misajon of Revenue Region No. 6-Manila on February 7, 2007, requesting for a "certification to the effect that I am a VAT exempt taxpayer." As represented, Linaflor J. Delos Santos is operating a business under the name RJS Marketing with office address at #736 N. Padilla St., San Miguel, Metro Manila and registered with the Department of Trade and Industry (DTI) under DTI Certificate No. 00130431 issued on May 12, 2005. It is also registered with the Bureau of Internal Revenue with TIN No. 100-095-547-000. It is engaged in wholesale and retail of agricultural and marine products such as meats, fish and chickens. Revenue Officer Mary Jane C. Bertiz of Revenue District Office No. 32 recommended the issuance of VAT Exemption after finding that all necessary documents have been complied with. EcDSTI In reply, please be informed that the sale of agricultural and marine food products is exempt from VAT pursuant to Section 109 (A) of the Tax Code of 1997, as amended by Republic Act No. 9337 which states, viz: "SEC. 109. Exempt Transactions . (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: (A) 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 therefore." Products classified under this paragraph 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, ordinary salt and copra shall be considered in their original state;" Section 4.109-1 of Revenue Regulations (RR) No. 16-2005 implementing Section 109 (A) of the Tax Code provides that "(1) . . . (a) . . . Livestock shall include cows, bulls and calves, pigs, sheep, goats and rabbits. Poultry shall include fowls, ducks, geese and turkey. Livestock or poultry does not include fighting cocks, race horses, zoo animals and other animals generally considered as pets. Marine food products shall include fish and crustaceans, such as, but not limited to eels, trout, lobster, shrimps, prawns, oysters, mussels and clams. Meat, fruit, fish, vegetables and other agricultural and marine food products classified under this paragraph 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, stripping, including those using advanced technological means of packaging, such as shrink wrapping in plastics, vacuum packing, tetra pack, and other similar packaging methods. xxx xxx xxx" It must be understood that to be exempt from VAT, the subject agricultural and marine products must be in its original state as defined above. Moreover, this part of the law is limited in application it refers only to such products which are intended as food for human consumption (cited in VAT Ruling No. 077-99 dated August 6, 1999). Hence, the exemption is not given to a specific taxpayer but to the nature of the transaction involved. Accordingly, and provided that the subject agricultural and marine products (i.e., meats, fish and chickens) are in their original state and are food for human consumption, only the sale of the above products as qualified are considered VAT exempt. aETASc 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 as null and void. Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner