Exemption of the Sale or Importation of Agricultural and Marine Food Products from VAT

March 4, 1988 BIR RULING NO. 071-88 103 (b) 019-88 071-88 Gentlemen : In reply to your letter dated January 21, 1988, please be informed that pursuant to Section 9(b)(2) of Revenue Regulations No. 5-87 implementing Section 103(b) of the Tax Code as amended by E.O. No. 273, sale or importation of agricultural and marine food products is exempt from the value-added tax in all stages of production or distribution if sold in their original state . Meat, fruit, fish, vegetables and other agricultural and marine food products 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, smoking or stripping . Accordingly, dealers of dried fruits and vegetables as well as food companies engaged in the simple processing of agricultural and marine food products are exempt from the value-added tax. However, if said agricultural and marine food products, such as dried fruits, are packed or placed in bottles or cans and sold, the same are already considered as manufactured products (BIR Ruling No. 315-87); hence, subject to the value-added tax if their sales exceed P200,000.00 during the 12-month period. But if their sales derived from all lines of business do not exceed P200,000.00 during any 12-month period, they are exempt from the value-added tax but subject to 2% of their gross quarterly sales pursuant to Section 103(w) in relation to Section 112 of the Tax Code, as amended. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner