BIR Ruling No. 142-12

February 27, 2012 BIR RULING NO. 142-12 Sec. 109 (1) (A) NIRC; VAT Ruling No. 009-07 Best Harvest Meat Importers Corp . 1302 The One Executive Bldg.,Nayong Kanluran West Avenue, Quezon City Attention: Russ Ardeo President Gentlemen : This refers to your letter dated February 18, 2011 requesting on behalf of Best Harvest Meat Importers Corp. for exemption from value added-tax (VAT) on its importation of frozen meat pursuant to Section 109 (1) (A) of the National Internal Revenue Code of 1997, as amended. Documents submitted show that Best Harvest Meat Importers Corp.,with Tax Identification Number (TIN) 007-142-684-000, is a corporation duly organized and existing under the Philippine laws and registered with the Securities and Exchange Commission (SEC),bearing SEC Registration No. CS200815740; and that the purposes for its incorporation is to conduct and carry on the business of buying, selling, distributing, marketing at wholesale and retail all kinds of goods, commodities, wares and merchandise of every kind and description and to enter into all kinds of contracts for the export, import, purchase, acquisition, sale at wholesale or retail and other disposition for its own account as principal or in a representative capacity for manufacturer, merchandise broker, indentor, commission merchant, factors or agents, upon consignment of all kinds of goods, wares, merchandise or products, whether natural or artificial, such as but not limited to beef, pork, and other piggery, poultry and dairy products. In reply, please be informed that Section 109 (1) (A) of the Tax Code of 1997, as amended, provides that: DEIHSa "Sec. 109. Exempt transactions. (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: A. Sale or importation of agricultural and marine food products in their original state, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption; and breeding stock and genetic materials therefor. Products classified under this paragraph shall be considered in their original state even if they have undergone the simple processes of preparation or preservation for the market such as freezing, drying, salting, boiling, roasting, smoking or stripping." Likewise, the provisions of Revenue Regulations (RR) No. 16-2005 dated September 1, 2005 implementing the aforesaid provision of law provided, in clear and unmistakable language, under Section 4.109-1 (B) (1) (a) thereof that: "Meat, fruit, fish, vegetables and other agricultural and marine food products classified under this paragraph shall be considered in their original state even if they have undergone the simple processes of preparation or preservation for the market, such as freezing, drying, salting, broiling, roasting, smoking or stripping, including those using advanced technological means of packaging, such as shrink wrapping in plastics, vacuum packing, tetra-pack, and other similar packaging methods." Based on the foregoing, frozen meat falls within the purview of the definition of agricultural food products in their original state, the importation of which is exempt from VAT. Freezing is a simple process which does not alter the substance of the meat, much less transform it into another distinct product altogether. Accordingly, we hereby confirm your opinion that your importation of frozen meat is exempt from the 12% VAT imposed under Section 107 (A) of the Tax Code of 1997. (VAT Ruling No. 009-07 dated June 21, 2007) 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. CacHES Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue