BIR Ruling No. 069-14

February 25, 2014 BIR RULING NO. 069-14 Sec. 109 (1) (A) NIRC; BIR Ruling No. 022-99 Mega Dynamic Trading, Inc. Scout Santiago cor. Marathon Sts. Diliman, Quezon City 1103 Attention: Jesus R. Montemayor President Gentlemen : This refers to your letter dated February 23, 2011 requesting confirmation of your opinion that importation of raw chicken is not subject to the value added tax (VAT) and percentage tax pursuant to Section 109 (1) (A) of the National Internal Revenue Code of 1997, as amended. Documents submitted show that Mega Dynamic Trading, Inc., with Tax Identification Number (TIN) 005-199-457-000, is a corporation duly organized and existing under the Philippine laws and registered with the Securities and Exchange Commission (SEC), bearing SEC Registration No. AS095-008503; that the purpose for its incorporation is to engage in the importation of raw chicken; and that Mega Dynamic Trading, Inc. has been granted Certificate of Accreditation dated July 20, 2010 as importer by the Bureau of Customs. In reply, please be informed that Section 109 (1) (A) of the Tax Code of 1997, as amended, provides that: "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 therefor. 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, boiling, roasting, smoking or stripping." HcSaTI Likewise, the provisions of Revenue Regulations (RR) No. 16-2005 dated September 1, 2005 implementing the aforesaid provision of law provided, in clear and unmistakable language, under Section 4.109-1 (B) (1) (a) thereof, that: "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 or stripping, including those using advanced technological means of packaging, such as shrink wrapping in plastics, vacuum packing, tetra-pack, and other similar packaging methods." Based on the foregoing, the importation of raw chicken falls within the purview of the definition of agricultural food products in their original state, the importation of which is exempt from VAT. Accordingly, we hereby confirm your opinion that your importation of raw chicken is exempt from the 12% VAT imposed under Section 107 (A) of the Tax Code of 1997. ( BIR Ruling No. 022-99 dated February 25, 1999 ) 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, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue