Process of Dressing Chicken for Others for a Fee Subject to the 10% VAT

October 5, 1999 BIR RULING NO. 151-99 108 (A)-000-00-151-99 Atty. Edwin L. Marcos Chief, Tax Fraud Division BIR, Diliman Quezon City S i r : This refers to your letter dated September 2, 1999 requesting for a ruling as to whether or not the sale of services by 3J Foods Corporation, with business and office address at Barangay Sta. Ana, San Pablo City, specifically the dressing of chicken for Vitarich Corporation, is subject to the 10% value-added tax (VAT) on its gross receipts. prcd In reply, please be informed that pursuant to Section 108 of the Tax Code of 1997, stating: "SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties . "(A) Rate and Base of Tax . There shall be levied, assessed and collected, a value-added tax equivalent to ten percent (10%) of gross receipts derived from the sale or exchange of services, including the use or lease of properties. "The phrase "sale or exchange of services" means the performance of all kinds of services in the Philippines for others for a fee , remuneration , or consideration including those performed or rendered by . . . persons engaged in milling , processing , manufacturing or repacking goods for others ; . . . and similar services regardless of whether or not the performance thereof calls for the exercise or use of the physical or mental faculties. . . . (Emphasis supplied) Accordingly, the process of dressing chicken for others for a fee, remuneration, or consideration is subject to the 10% VAT pursuant to Section 108 of the Tax Code of 1997. llcd Such being the case, 3J Food Corporation, which is engaged in the business of dressing chicken for a fee for Vitarich Corporation, is liable to the payment of 10% VAT on its gross receipts. This ruling is issued on the basis of the foregoing representations. However, the same shall be considered null and void if the facts are different, upon investigation. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue