BIR Ruling No. 172-82

May 19, 1982 BIR RULING NO. 172-82 201-00 000-00 172-82 Verdolaga, Tardecilla, Lazaro & Co. Certified Public Accountants SMC Bldg., 5th Flr. Buendia Avenue Makati, Metro Manila Attention: Mr . Tirso F . Tardecilla Senior Partner Gentlemen : This refers to your letter dated March 14, 1981 requesting a ruling on the rate of sales tax payable by your client, Wise & Co., Corner Brickstone and Fairlane St., Pasig, Metro Manila, on its contemplated processing operation under the following facts: "Our client is about to start a processing operation for vegetables and sea foods such as small shrimps and small fishes. The company will buy these from small farmers and fishermen, either in dry or fresh stage. Then the vegetables and sea foods will be further dried through a dehydration process to remove moisture to the extent of 7 to 10%. After this process, it is granulated and pulverized, then packed for sale to local and export market. They also will engage in repacking of refined sugar to be sold to food manufacturers and confectioneries. The process is simple. The refined sugar is sifted through several meshes to produce a narrow mesh cut." In reply, I have the honor to inform you that in processing small shrimps and fishes by granulation, pulverization and packing, your client is considered "manufacturer" of locally processed fish and other seafoods, hence, it is liable for the payment of the 5% sales tax, imposed under Section 201 of the Tax Code of 1977, as amended. The vegetable undergoing the same processes are subject to the 10% sales tax imposed by Section 199(a) of the same Code. If vegetables and seafoods are mixed undergoing the same processes, they are subject to the 10% sales tax on sales of other articles under Section 199 of the same Code. However, the processed vegetables and seafoods are exempt from the sales tax if sold in the export market. aisadc The repacked refined sugar after undergoing the process of sifting the refined sugar through several meshes to produce a narrow mesh cut and thereafter sold to food manufacturers and confectionaries is subject to the graduated annual fixed tax under Section 192(2) of the Tax Code, as amended. Very truly yours, RUBEN B. ANCHETA Acting Commissioner