BIR Ruling [DA-552-06]

September 14, 2006 BIR RULING [DA-552-06] Section 109 (A); BIR Ruling No. DA-166-2006 Mr. Pedro B. Unabia 95 Macabagdal St. Caloocan City S i r : This refers to your letter dated March 30, 2006 requesting for confirmation of your opinion that "lechon manok" is exempt from value-added tax (VAT). As represented, you are a franchisee of Ang Lechon Manok ni Senior Pedro in the Metro Manila and Luzon area. Ang Lechon Manok ni Senior Pedro is a single proprietorship with several franchisees in Metro Manila and the Luzon area. As franchise holder, you are engaged in the sale of "lechon manok." TEacSA In reply, please be informed that pursuant to Section 109(A) of the Tax Code of 1997, as amended, as implemented by Section 4.109-1 (B) of Revenue Regulations No. 16-2005, the sale or importation of agricultural 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 is exempt from VAT. 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. From the foregoing, it is clear that the sale of "lechon manok" (roasted chicken) is VAT-exempt under the abovementioned Section as this food product undergoes simple roasting processes and, as such, is considered in its original state. In BIR Ruling No. DA-166-2006 dated March 26, 2006, this Office had occasion to rule that the sole product of the taxpayer's joint venture involves lechon, a VAT-exempt food product under Section 109(A) of the Tax Code of 1997, as amended. In view of the foregoing, this Office confirms your opinion that the sale of "lechon manok" is exempt from VAT. 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service