Picazo Buyco Tan Fider & Santos

November 19, 2008 BIR RULING [DA-(VAT-040) 447-08] 109 (B); VAT Ruling 017-04 Picazo Buyco Tan Fider & Santos Law Offices 18th, 19th, & 17th Floors Liberty Center 104 H.V. dela Costa Street Salcedo Village, Makati City Attention: Ma. Adelina S. Gatdula Gentlemen : This refers to your letter dated November 05, 2008 requesting on behalf of your client, Western Sales Trading Company (Phils.), Inc. ("WSTCo"), for a ruling as to whether importations and sale of turf grass fertilizer by WSTCo are exempt from Value-Added tax (VAT) pursuant to Section 109 (B) of the Tax Code of 1997, as amended. It appears that WSTCo is a corporation organized and existing under the laws of the Republic of the Philippines with principal office address at Unit 9, Lot 11/12, Argonaut Highway, Boton Area, Subic Freeport Zone and with administrative/facilitation/liaison office address at 3F Raja Sulayman Building, 108 Benavidez Street, Legaspi Village, Makati City; that WSTCo is duly registered with the BIR as a Trading Company and with the Fertilizer and Pesticide Authority (FPA) of the Department of Agriculture as an Importer and Distributor of Fertilizers. Furthermore, WSTCo intends to import from the United States of America lawn care products (more commonly known as fertilizers) of Floratine Products Group, Inc. ("Floratine"). These fertilizers for golf courses are covered by a Certificate of Product Registration from the FPA. Pursuant to Table 2.8 of the FPA Crop Groupings and Representative Crops, turf belongs to Crops Group 9. In fact, recently, WSTCo imported three (3) pallets of such Floratine fertilizers. In support of WSTCo's request for VAT Exemption, the FPA on September 15, 2008 issued a Certification interposing no objection to the shipment of the said Floratine products which are covered by Bill of Lading No. MEMMAN0838001. In reply, please be informed that pursuant to Section 109 (B) of the Tax Code of 1997, as amended, to wit: "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) . . . (B) 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 specially feeds for race horses, fighting cocks, aquarium fish, zoo animals and other animals generally considered as pets); (underscoring ours) CHDTIS (C) . . ." In view of the foregoing, and considering that your importation and sale of turf grass/golf course fertilizer by WSTCo had been issued a Certificate of product Registration by the Fertilizer and Pesticide Authority, your importation and sale of such fertilizer shall be exempt from VAT pursuant to the above-cited provision of the Tax Code of 1997, as amended. (VAT Ruling No. 017-04 dated June 02, 2004) 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service