BIR Ruling No. 096-10

October 6, 2010 BIR RULING NO. 096-10 Sections 106, 108; VAT Ruling No. 029-2002 Asiagel Corporation Rm. 503 Burke Bldg., Escolta, Manila Philippines Attention: Mr. Christian A. Pile President/General Manager Gentlemen : This refers to your letter dated December 8, 2004, requesting confirmation that the export trade of raw, dried seaweed and the importation of and local trade of various culture media, agar, and diagnostic reagents are subject to zero percent (0%) VAT. TcAECH It is represented that you are an established Filipino corporation registered with the Securities and Exchange Commission under SEC Registration No. AS096-005710 dated May 30, 2005 and with the Department of Trade and Industry under Certification No. 00029293 dated January 28, 2005; that you are also a VAT registered entity; and that you attached a product specification catalog of various culture media, agar, and diagnostic agents. In reply, please be informed that Section 106 (A) (2) (a) of the Tax Code of 1997, as implemented by Section 4.100-2 (a) of Revenue Regulations No. 7-95, as amended, subjects to zero percent (0%) rate: "Export Sales. The term 'export sales' means: (1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or equivalent in goods and services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);" Moreover, please be informed that as a VAT registered entity, your direct export sales of raw, dried seaweed are automatically zero-rated; hence there is no need to file an application for zero rate. (VAT Ruling No. 107-88). Further, Section 107 (A) of the Tax Code of 1997 provides: "SEC. 107. Value-added Tax on Importation of Goods. (A) In General. There shall be levied, assessed and collected on every importation of goods a value-added tax equivalent to ten percent (10%) based on the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise taxes, if any, and other charges, such tax to be paid by the importer prior to the release of such goods from customs custody: Provided, That where the customs duties are determined on the basis of the quality or volume of the goods, the value-added tax shall be based on the landed cost plus excise taxes, if any." IEaATD Since there is no showing that culture media, agar, and diagnostic reagents are classified as agricultural products, nor are they qualified to be considered as feed additives, your importation and subsequent sale of culture media, agar, and diagnostic reagents which are not within the purview of the definition of a food product in its original state, is subject to the 12% value-added tax. Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue