BIR Ruling No. 031-11

February 9, 2011 BIR RULING NO. 031-11 RR 16-2005; 00-000 Agumil Philippines, Inc. Palawan Operations Km. 172, Maasin, Brooke's Point Palawan Attention: Mr. Ponciano P. Narciso General Manager Gentlemen : This refers to your letter dated October 4, 2010 stating that Agumil Philippines, Inc. is a corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. ASO94-0011572 with TIN 004-382-755-003; that it is primarily organized to "[E]ngage in, operate, conduct and maintain the business of manufacturing, importing, exporting, buying, selling or otherwise dealing in, at wholesale such goods as palm oil and all kinds of vegetable oils, palm oil fruits and vegetable oil crops and other goods of like nature, and any and all equipment, materials, supplies used or employed in or related to the manufacture of such finished products;" that on March 19, 2010, a Certificate of Eligibility was issued in its favour by the Department of Agriculture as an agricultural processor and eligible for tariff-exempt importation pursuant to Executive Order (EO) No. 376 reinstating the Effectivity of Tax Incentives under Republic Act (RA) No. 8435; that Agumil Philippines, Inc. has imported 13 packages of Germinated DXP Oil Palm Seeds from Papua New Guinea as evidenced by Air Way Bill (AWB) No. 656 0571 7106; and that said importation shall be used for seedling purposes in Maasin, Brooke's Point, Palawan. Based on the foregoing representations, you now request for a ruling that the importation of the 13 packages of Germinated DXP Oil Palm Seeds which shall be used for seedling purposes is exempt from value-added tax (VAT) pursuant to Section 109 (B) of the Tax Code of 1997, as implemented by Revenue Regulations No. 16-2005, as amended. In reply thereto, please be informed that Section 109 (B) of the Tax Code of 1997 provides that TCAScE "(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 specialty feeds for race horses, fighting cocks, aquarium fish, zoo animals and other animals generally considered as pets);" shall be exempt from value-added tax. In stressing the rationale of the above-cited provisions, this Office elucidated the matter in BIR VAT Ruling No. 425-88 dated September 15, 1988 , as follows: ". . . importation of tomato seeds in tin cans by ALLIED BOTANICAL CORPORATION with the information that such commodities are not for food feed or oil purposes. Such being the case, their importation is exempt from the value-added tax pursuant to Section 103(c) of the Tax Code as amended to wit: "Sale or importation of fertilizers . . . seeds, seedlings and fingerlings . . . The authority to release the said goods can now be issued." SUCH BEING THE CASE, this Office holds that the importation of germinated DXP oil palm seeds, which shall be used for seedling purposes, is EXEMPT from the 12% VAT pursuant to Section 109 (B) of the Tax Code of 1997, as implemented by Revenue Regulations No. 16-2005, as amended. 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. SDECAI Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue