Boulders or Stones Subject to 2% Excise Tax Based on Actual Market Value of Gross Output at the Time of Removal

May 22, 1998 BIR RULING NO. 055-98 106; 151-000-00-055-98 Pililla Aggregates Corp. G/F Reliance Center 99 E. Rodriguez Jr. Ave. Ugong, Pasig City Attention: Mr . Danilo O . Cortez Chief Accountant Gentlemen : This refers to your letter dated January 21, 1998 stating that you are a VAT-registered company engaging in quarrying business; and that you are currently selling boulders or stones quarried from your land. LLphil Based on the foregoing, you are requesting clarification as to whether the sale of boulders or rocks/stones is exempt from VAT under Section 109(a) of the Tax Code of 1997 which enumerates, among the transactions exempt from VAT, the sale of nonfood agricultural products, marine and forest products in their original state by the primary producer or owner of the land where the same are produced. In reply, please be informed that common stone falls under the definition of "Quarry resources" as defined in Section 151(B)(4) of the Tax Code of 1997. Revenue Regulations No. 13-94 dated July 20, 1994 which governs the imposition of excise tax on minerals and mineral products also contains the same definition of "quarry resources". Such being the case, boulders or stones cannot be considered as nonfood agricultural products and/or forest products in their original state, in which case, said products are subject to 2% excise tax based on the actual market value of the gross output thereof at the time of removal, pursuant to Section 151(A)(2) of the Tax Code of 1997. In addition, said products are subject to 10% VAT imposed under Section 106(A) of the same Code. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue