BIR Ruling No. 084-13

March 5, 2013 BIR RULING NO. 084-13 Sec. 109 (1) (B); 00-000 Isla Lipana & Co. 29th Floor, Philamlife Tower 8767 Paseo de Roxas Makati City Attention: Atty. Alexander B. Cabrera Managing Partner Gentlemen : This refers to your letter dated April 27, 2012 stating that your client, DSM Nutritional Products Philippines, Inc. (DNPPI), is a corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. A200101573 with TIN 209-528-248-000; that it is organized primarily HTSIEa "To manufacture, prepare for market, purchase, import or otherwise acquire, own, improve, develop, invent, sell and distribute exclusively at wholesale, and generally deal in and with, feed and food additives, supplements and ingredients for pharmaceutical, cosmetic and other industrial purposes and as an incident to the foregoing, to apply for, obtain, register, purchase or otherwise acquire and hold, own, lease, operate, introduce, and sell, distribute, assign or otherwise dispose of franchises, trademarks, secret formulas, processes, methods, know-how, trade names and distinctive marks and inventions, improvements and processes used in connection with or secured under letters patent or otherwise, of the Republic of the Philippines, or of any other country, and any governmental grants or concessions, all in relation to or with the purpose of the Corporation, and to use, exercise, develop or grant licenses or franchises in respect of such franchises, trademarks, formulas, trade names, patents, licenses, concessions, processes, and the like, or any other property rights and information so acquired." and that the hereunder described products, are registered with the Bureau of Animal Industry (BAI) under BAI License to Operate No. VDAPDI-0014 pursuant to the provisions of Republic Act (RA) No. 3720, as amended, known as the Foods, Drug and Devices and Cosmetics Act, RA No. 6675, otherwise known as Generics Act of 1998 and RA No. 1556, as amended, otherwise known as the Livestock and Poultry Feeds Act, to wit: Name Brand Packaging BAI BAI Dosage of Product (if any) Registration License Form No. No. Vitamin A Acetate Rovimix A 500 20 kg. VRI-02-1642 VDAPDI- Powder WS 0014 Vitamin A Acetate Rovimix A 20 kg. VRI-04-2075 VDAPDI- Powder 0014 Vitamin A Acetate Rovimix A 500N 25 kg. box VRI-11-4518 VDAPDI- Powder 0014 Vitamin D3 Rovimix D3 500 20 kg. VRI-92-23 VDAPDI- Powder 0014 Vitamin E Rovimix E-50 25 kg. VRI-92-24 VDAPDI- Powder Adsorbate 0014 Vitamin E Rovimix E-50 SD 20 kg. VRI-02-1586 VDAPDI- Powder 0014 Thiamine 20 kg. VRI-92-26 VDAPDI- Powder Hydrochloride 0014 Thiamine Rovimix B1 25 kg. VRI-92-27 VDAPDI- Powder Mononitrate 0014 Riboflavin Rovimix B2 80-SD VRI-01-1229 VDAPDI- Powder 0014 Pyridoxine Rovimix B6 25 kg. VRI-08-3276 VDAPDI- Powder Hydrochloride 0014 Ascorbic Acid Rovimix C-EC 25 kg. VRI-92-31 VDAPDI- Powder 0014 Ascorbic Acid Rovimix Stay C 35 25 kg. VRI-98-731 VDAPDI- Powder Phosphate 0014 Menadione Rovimix K3 MNB 25 kg. VRI-08-3372 VDAPDI- Feed Premix Nicotinamide Bisulfite 0014 Powder Menadione K3 Stab 25 kg. VRI-07-2819 VDAPDI- Feed Premix Nicotinamide Bisulfite 0014 Powder Calcium D- Rovimix Calpan 25 kg. VRI-92-33 VDAPDI- Powder Pantothenate 0014 25-Hydroxy Vitamin Rovimix Hy D 1 kg. VRI-03-1170 VDAPDI- Powder D3 1.25% 0014 Folic Acid Rovimix Folic 80 20 kg. VRI-92-35 VDAPDI- Powder SD 0014 Folic Acid 25 kg. VRI-92-36 VDAPDI- Powder 0014 Niacin Rovimix Niacin 25 kg. VRI-92-37 VDAPDI- Powder 0014 Vitamin B12 1% 5 kg. VRI-92-38 VDAPDI- Feed Grade 0014 Powder Canthaxanthin Carophyll Red 5 kg. VRI-07-2835 VDAPDI- Powder 10% 0014 Apocarotenoic Ester Carophyll Yellow 5 kg. VRI-07-2834 VDAPDI- Powder 10% 0014 Vitamin A, D3, E, K3, Rovimix 6188 20 kg. VRI-97-672 VDAPDI- Feed Premix B1, B2, B6, B12, Vitamin 0014 Powder Niacin, Pantothenic Concentrate for Acid, Folic Acid, Biotin Poultry Vitamin A, D3, E, K3, Rovimix 6188 Plus 20 kg. VRI-97-673 VDAPDI- Feed Premix B1, B2, B6, B12, 0014 Powder Niacin, C, Pantothenic Acid, Folic Acid, Biotin Vitamin A, D3, E, K3, Rovimix 6288 20 kg. VRI-97-674 VDAPDI- Feed Premix B1, B2, B6, B12, Vitamin 0014 Powder Niacin, Pantothenic Concentrate for Acid, Folic Acid, Biotin Poultry Vitamin A, D3, E, K3, Rovimix 8188 20 kg. VRI-97-675 VDAPDI- Feed Premix B1, B2, B6, B12, Vitamin 0014 Powder Niacin, Pantothenic Concentrate for Acid, Folic Acid, Biotin Swine Vitamin A, D3, E, K3, Rovimix 8188 + 20 kg. VRI-08-3277 VDAPDI- Feed B1, B2, B6, B12, Hy D 0014 Supplement Niacin, Pantothenic Powder Acid, Folic Acid, Biotin, 25-OH-D3 Vitamin A, D3, E, K3, Rovimix 328W 10 kg. and VRI-10-3909 VDAPDI- Feed Premix B1, B2, B6, B12, C, 250 grams 0014 Powder (For Niacin, Pantothenic Poultry and Acid, Folic Acid, Swine) Biotin, L-Lysine, DL- Methionine Vitamin A, D3, E, K, Rovimix 25 kg. VRI-08-3370 VDAPDI- Feed B1, B2, B6, B12, Poultrymix PVP 0014 Supplement Niacin, Pantothenic Powder Acid, Folic Acid, Biotin Vitamin A, D3, E, K, Rovimix Hogmix 25 kg. VRI-08-3371 VDAPDI- Feed B1, B2, B6, B12, SVP 0014 Supplement Niacin, Pantothenic Powder Acid, Folic Acid, Biotin Vitamin A, D3, E, K, Rovimix Blend 20 kg. VRI-07- VDAPDI- Feed B1, B2, B6, B12, CBM 2910(CM) 0014 Supplement Niacin, Pantothenic Powder Acid, Folic Acid, Biotin Vitamin A, D3, E, K, Rovimix Blend 20 kg. VRI-07- VDAPDI- Feed B1, B2, B6, B12, BGM 2911(CM) 0014 Supplement Niacin, Pantothenic Powder Acid, Folic Acid, Biotin Vitamin A, D3, E, K, Rovimix Blend 20 kg. VRI-07- VDAPDI- Feed B1, B2, B6, B12, BFC/P 2914(CM) 0014 Supplement Niacin, Pantothenic Powder Acid, Folic Acid, Biotin Vitamin A, D3, E, K, Rovimix Blend 20 kg. VRI-07-2913 VDAPDI- Feed B1, B2, B6, B12, VPO2 (CM) 0014 Supplement Niacin, Pantothenic Powder Acid, Folic Acid, Biotin Vitamin A, D3, E, K, Rovimix Blend 20 kg. VRI-07- VDAPDI- Feed B1, B2, B6, B12, C, VPO7 Mash/Pellet 2912(CM) 0014 Supplement Niacin, Pantothenic Powder Acid, Folic Acid, Biotin Vitamin A, D3, E, K3, Rovimix Blend VC 20 kg. CM-05-0014 VDAPDI- Customized B1, B2, B6, B12, 62 0014 Premix Niacin, Pantothenic Acid, Folic Acid, Biotin Vitamin A, D3, E, K3, Rovimix Blend 20 kg. bag CM-04-0015 VDAPDI- Customized B1, B2, B6, B12, VC81 in 0014 Premix Niacin, Pantothenic Cardboard Acid, Folic Acid, Biotin box Vitamin A, D3, E, K3, Rosigold S + 20 kg. VRI-08-3283 VDAPDI- Feed B1, B2, B6, B12, Hy D 0014 Supplement Niacin, Pantothenic Powder Acid, Folic Acid, Biotin, 25-OH-D3 Vitamin A, D3, E, K3, Rosigold P 20 kg. VRI-98-826 VDAPDI- Feed Additive B1, B2, B6, B12, 0014 Powder Niacin, Pantothenic Acid, Folic Acid, Biotin Vitamin A, D3, E, K3, Rosigold P + 20 kg. VRI-08-3284 VDAPDI- Feed B1, B2, B6, B12, Hy D 0014 Supplement Niacin, Pantothenic Powder Acid, Folic Acid, Biotin, 25-OH-D3 Vitamin A, D3, E, K3, Rosigold Blend 20 kg. VRI-CM-05- VDAPDI- Feed Additive B1, B2, B6, B12, 0024 0014 Powder Niacin, Pantothenic Acid, Folic Acid, Biotin Iron, Copper, Rosigold Mineral 25 kg. VRI-04-2055 VDAPDI- Feed Additive Manganese, Zinc, P Trace Mineral 0014 Powder Cobalt, Iodine, Premix for Poultry Selenium Iron, Copper, Rosigold Mineral 25 kg. VRI-04-2054 VDAPDI- Feed Additive Manganese, Zinc, S Trace Mineral 0014 Powder Cobalt, Iodine, Premix for Swine Selenium Vitamin A, D3, E, K3, Rosigold WSP 250 g. and VRI-03-1772 VDAPDI- Water Soluble B1, B2, B6, B12, C, 10 kg. 0014 Powder Niacin, Pantothenic Acid, Biotin, Folic Acid B-Xylanese Ronozyme WX (L) 25 L VRI-01-1312 VDAPDI- Liquid 0014 B-Xylanese Ronozyme WX 20 kg. VRI-97-676 VDAPDI- Granular (CT) 0014 a-Amylase + B- Ronozyme A (CT) 20 kg. VRI-03-1773 VDAPDI- Granular Glucanase 0014 Enzyme Supplement Phytase Ronozyme P (L) 25 kg. VRI-01-1154 VDAPDI- Liquid 0014 Ronozyme NP (L) Ronozyme NP (L) 25 kg. VRI-08-3378 VDAPDI- Liquid 0014 Phytase Ronozyme NP 20 kg. VRI-08-3359 VDAPDI- Granular (CT) 0014 Phytase Ronozyme NP (M) 25 kg. VRI-08-3377 VDAPDI- Granular 0014 Phytase Ronozyme P5000 20 kg. VRI-05-2511 VDAPDI- Granular (CT) 0014 Enzyme B-Glucanase Ronozyme VP 20 kg. VRI-98-829 VDAPDI- Granular (CT) 0014 Enzyme Supplement B-Glucanase Ronozyme VP (L) 25 L VRI-01-1313 VDAPDI- Liquid 0014 Protease Ronozyme ProAct 20 kg. VRI-09-3482 VDAPDI- Granular (CT) 0014 Protease Ronozyme ProAct 20 kg. VRI-11-4118 VDAPDI- Granular (CT) 0014 B-Glucanase + B- Roxazyme G2 G 20 kg. VRI-02-1582 VDAPDI- Granular Xylanese 0014 Enzyme Benzoic Acid Vevo Vitall 25 kg. VRI-04-2141 VDAPDI- Feed Additive Benzoic Acid 0014 Powder Enterococcus Faecium Rovimix Cylactin 10 kg. VRI-07-2992 VDAPDI- Feed Premix LBC ME10 0014 Powder Eugenol + Guaiacol + Crina Piglets 25 kg. VRI-08-3434 VDAPDI- Feed Premix Thymol + Metacresol + 0014 Powder Isopentyl Salicylate Thymol + Eugenol + Crina Poultry 25 kg. VRI-08-3432 VDAPDI- Feed Premix Metacresol + Isopentyl 0014 Powder Salicylate + Piperine Eugenol + Guaiacol + Crina Finishing 25 kg. VRI-08-3433 VDAPDI- Feed Premix Thymol + Metacresol + Pigs and Sows 0014 Powder Isopentyl Salicylate + Piperine Thymol + Eugenol + Crina Poultry Plus 25 kg. VRI-11-4117 VDAPDI- Feed Premix Metacresol + Isopentyl + 0014 Powder Salicylate + Piperine + Benzoic Acid Necleotide Rovimax NX 20 kg. VRI-11-4116 VDAPDI- Feed Premix 0014 Powder Vitamin A, D3, E, Rovimix Blend 20 kg. VRI-11-4521 VDAPDI- Feed Premix K3, B2, B12, Niacin, CJ1 0014 Powder for Folic Acid, Pantothenic Swine Acid, Biotin Vitamin A, D3, E, K3, Rovimix Blend 20 kg. VRI-11-4520 VDAPDI- Feed Premix B1, B6, C, B2, B12, CJ2 0014 Powder for Niacin, Folic Acid, Poultry Pantothenic Acid, Biotin Vitamin A, D3, E, K3, Rovimix Blend 20 kg. VRI-11-4519 VDAPDI- Feed Premix B1, B6, C, B2, B12, CJ3 0014 Powder for Niacin, Folic Acid, Aqua Pantothenic Acid, Biotin, Inositol Copper, Manganese Rovimix Blend 25 kg. VRI-11-4220 VDAPDI- Feed Cobalt, Iodine, Zinc, (MS) 0014 Supplement Selenium, Magnesium Powder Vitamin A, D3, E, K, C, Rovimix Blend (F) 20 kg. VRI-11-4219 VDAPDI- Feed B1, B2, B6, Niacin, 0014 Supplement Pantothenic Acid, Folic Powder Acid, Biotin Copper, Manganese, Rovimix Blend 20 kg. VRI-11-4218 VDAPDI- Feed Cobalt, Iodine, Zinc, (MF) 0014 Supplement Selenium, Iron Powder Vitamin A, D3, E, K, Rovimix Blend (S) 20 kg. VRI-11-4221 VDAPDI- Feed B1, B2, B6, B12, 0014 Supplement Niacin, Pantothenic Powder Acid, Folic Acid, Biotin, C, Inositol Based on the foregoing representations, you now request for confirmation of your opinion that its importation and sale of feed ingredients are exempt from value-added tax (VAT) pursuant to Section 109 (1) (B) of the Tax Code of 1997, as amended by RA No. 9337. In reply thereto, please be informed that Section 109 (1) (B) of the Tax Code of 1997, as implemented by Revenue Regulations No. 16-2005, 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. xxx xxx xxx (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 houses, fighting cocks, aquarium fish, zoo animals and other animals generally considered as pets); (emphasis supplied) xxx xxx xxx" The words "ingredients" and "feeds" are defined in Section 3 of RA No. 1556 (An Act to Regulate and Control the Manufacture, Importation, Labelling, Advertising and Sale of Livestock and Poultry Feeds), otherwise known as the "Livestock and Poultry Feeds Act", as amended by Presidential Decree (PD) No. 7, provides "SEC. 3. Definitions . For the purpose of this Act, the following terms shall mean: xxx xxx xxx (d) "Feeds" or "Feeding Stuff" shall include all such articles to be used as feeds for the purpose of feeding purporting to supply proteins, carbohydrates, fats, minerals, vitamins, antibiotics and/or correcting nutritional disorders. Such articles may be locally produced or imported, mixed or in the form of simple ingredients. aETASc xxx xxx xxx (l) "Ingredients" means any single article of feed or feeding stuff which enters into the composition of a ration, concentrate, or supplement." Corollarily, Section 4 supra states "SEC. 4. Registration . (a) Any person, partnership, firm, corporation or association desiring to engage in the manufacture, importation, sale or distribution of feeds or feeding stuffs shall first be registered in the Office of the Director. (b) Applications for registration or annual renewal thereof, shall be made by the person, partnership, firm, corporation or association marketing, manufacturing, or importing such feeds or feeding stuffs, or by his accredited agent in such form and manner as may be prescribed from time to time by regulation. (c) An application for registration shall be accompanied by a registration fee of five pesos for a person, firm, partnership, corporation or association engaged in the retailing or distribution of commercial feeds or feeding stuffs, and one hundred pesos for manufacturers and/or importers of commercial feeds or feeding stuffs. (d) No feeds or feeding stuffs in the form of complete mixture, concentrate, supplement, or ingredients which have not been registered with the Director, shall be manufactured, imported, advertised, sold or offered for sale or held in possession for sale in the Philippines. xxx xxx xxx" Likewise, the Department of Agriculture (DA) in DA Administrative Order No. 12-07 (Revised Implementing Rules and Regulations on the Registration of Feed Establishments and Feed Products) defined the following terms as follows: "SEC. 2. Definition of Terms . For purposes of these rules and regulations, the following definitions are hereby adopted: xxx xxx xxx 2.28. Feed Additive refers to an ingredient or combination of ingredients which is added to the basic mixed feed to fulfill a specific need which include, but not limited to, acidifiers, antioxidants, aromatics, deodorizing agents, flavour enhancers, mold inhibitors, pellet binders, preservatives, sweeteners, toxin binders, etc. It is usually used in micro quantities and requires careful handling and mixing. A feed additive may have no nutritive value but is added to the feed to improve its quality and efficacy. xxx xxx xxx 2.38. Feed Premix refers to a uniform mixture of one or more micro-ingredients with diluents and/or carrier. Premixes are used to facilitate uniform dispersion of the micro-ingredients in large mix. xxx xxx xxx 2.41. Feed Supplement refers to a feed ingredient or mixture of feed ingredients intended to supply the deficiencies in a ration or improve the nutritive balance or performance of the total mixture. For purposes of this AO, amino acids, fatty acids, vitamins and minerals are considered as feed supplements. xxx xxx xxx" As represented since the above-mentioned products are classified as feed additives, feed premix or feed supplements based on the BAI Certificates of Product Registration, and are primarily used for the production of livestock and poultry feeds, this Office holds that the sale or importation of the above-mentioned feeds ingredients are EXEMPT from VAT pursuant to Section 109 (1) (B) of the Tax Code of 1997, as implemented by Revenue Regulations No. 16-2005, as amended. However, please note that the same shall not be released from customs custody unless a duly approved ATRIG is secured. AaITCS 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