Imported Raw Materials Used in the Manufacture of Poultry, Swine and Cattle Feeds Subject to the 10% Advance Sales Tax

June 13, 1985 BIR RULING NO. 086-85 201-f 000-00 086-85 S i r : Poultry, swine and cattle feeds are subject to the 5% sales tax, in accordance with Section 201(f) of the Tax Code, as amended. This Office has ruled that the raw materials used in the manufacture of said finished products are not subject to the same rate of tax because Section 201 does not mention raw materials as subject to the same rate of tax as the finished products enumerated in the said provision. Such being the case, the imported raw materials such as meat and bone meals, fish meal, whey powder and skimmed milk powder which are used in the manufacture of poultry, swine and cattle feeds are subject to the advance sales tax at the rate of 10% based on the landed cost thereof, plus 25% mark-up pursuant to Section 199 (a) in relation to Section 193(b) of the Tax Code as amended by Executive Order No. 883. (BIR Ruling No. 153-82) This Office has also ruled that the said imported articles to be sold "as is" directly to poultry, swine and cattle raisers are subject to the 5% advance sales tax based on landed cost thereof plus 25% mark-up under Section 201(f) in relation to Section 193(b) of the Tax Code. (BIR Ruling No. 050-85) In connection therewith, please be informed that an inquiry made by this Office from the Bureau of Animal Industry disclosed that the aforesaid authorized imported animal ingredients such as skimmed milk powder, meat and bone meal, fish meal, whey powder, rape seed meal, DL-methionine, lysine and choline feed grade, poultry feed peas, sunflower, alfalfa meal, feed oats and feed barley, etc. cannot be used directly for feeding to the fowl, swine and cattle but have to be mixed with other ingredients first prior to their use. Accordingly, all of the said imported articles being considered as raw materials, regardless of whether they are sold directly to poultry, swine and cattle raisers, are subject to the 10% advance sales tax. The articles mentioned in Section 201(f) of the Tax Code, as subject to a lower rate of tax of 5%, namely, "poultry, swine and cattle feeds" should be construed to mean finished articles, imported or locally produced, which can be used for direct feeding to the fowl, swine and cattle without any mixture with other ingredients. cdtech This revokes aforesaid BIR Ruling No. 050-85. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner