Processor of Food Products, When Subject to 10% VAT

July 17, 1991 BIR RULING NO. 137-91 100 (a) (1) 103 (v) 315-87 137-91 Gentlemen : This refers to your letter dated May 21, 1991 requesting a ruling as to whether your client, Wellington Food Products International, C. Mercado Street, Tuktukan, Guiguinto, Bulacan, a registered sole proprietorship is a processor of food products. It is represented that your client is principally engaged in buying food products direct from the factory; packing the same under its own name in presentable, sanitized packaging containers, in boxes and plastics; and subsequently, selling and distributing the same to the local markets. Your client also intends to export its products to the foreign markets initially in Asia and Australia. In reply, please be informed that the business of your client which consists of buying food products from the factory, packing the same under its own name in presentable, sanitized packaging containers, in boxes and plastics; and subsequently selling and distributing the same to the local markets renders your client a processor of food products; hence, subject to the 10% VAT pursuant to Section 100 (e) of the Tax Code if its sales exceeds P200,000.00 during a 12-month period. Otherwise, if its sales do not exceed P200,000.00 during the 12-month period, it may not opt to register as a VAT taxpayer in which case, it shall be only subject to the 2% tax based on its gross quarterly sales pursuant to Section 103 (w) in relation to Section 112 of the Tax Code, as amended. If your client registers as a VAT taxpayer, it shall be subject to 10% VAT. In such a case, when it exports its products, it shall be subject to VAT at zero percent (0%) pursuant to Section 100 (a) (1) of the Tax Code. Otherwise, if it exports its product while not registered as a VAT taxpayer, it shall be merely exempt pursuant to Section 103 (v) of the Tax Code, as amended by Executive Order No. 273. Very truly yours, (SGD.) JOSE U. ONG Commissioner