Exemption of Paminta from VAT

March 10, 1988 BIR RULING NO. 092-88 103 (b) 019-88 092-88 S i r : This refers to your letter dated January 26, 1988, stating that you are the owner of Anastacio L. Products, a VAT-registered business establishment; and that you want information on the following questions, if you have this transaction, viz: Paminta (local) without VAT P70.00 Labor 10.00 Plastic bag 10.00 P90.00 marked up 10.00 Gross price P100.00 ======= "1. If gross price is P100.00 how will I arrive at my value-added tax? How much will I pay? "2. Is paminta (local) exempted with the VAT? "3. If paminta (local) are to be grained to be powder, will it be exempted with VAT? "4. Is Roasted Soy Beans (local) also be exempted with VAT? "5. If Roasted Soy Beans (local) are to be grained to powder, Will it be also exempted with the VAT?" In reply, please be informed as follows: 1. Under the foregoing set of facts, where your gross selling price of paminta which are packed in plastic bags is P100.00 and you do not intend to pass on the value-added tax by billing said tax as a separate item in your invoice, your value-added tax (output tax) is determined by multiplying the selling price of P100.00 by the factor 1/11. In other words, the VAT thereon is P9.09. However, your VAT liability depends on how much input taxes you generated on your purchases of goods and services from VAT-registered suppliers of goods and services used in your VAT-registered business. 2. Paminta (local) when sold, whether whole, roasted or ground is exempt from VAT in all stages of distribution pursuant to Sec. 103(b) of the Tax Code as amended, provided that you did not register said activity under the optional category of registration. 3. Paminta (local) ground when sold is also exempt from VAT (see No. 2 above). However, if the ground paminta is packed or placed in bottles or cans, the same are already considered manufactured products. (BIR Ruling No. 315-87); hence, subject to the value-added tax if your sales exceed P200,000 during the 12-month period. 4. Answer to question No. 4 is the same as in No. 2 above. 5. Answer to question No. 5 is the same as in No. 3 above. However, the VAT follows the rule on aggregation. In other words, all your sales of goods subject to VAT shall be aggregated, so much so, that if your sales exceed P200,000 during the 12-month period, the same are subject to VAT. However, if you are not a VAT registered person and your sales of manufactured paminta and soy beans do not exceed P200,000 during the 12-month period, then your sales thereof shall be subject to 2% tax under Sec. 112 of the tax Code. In no case, however, should the sales of agricultural food product in their original state be included in the determination of the 2% tax. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner