10% VAT Imposed on Cassava Starch

July 13, 1988 BIR RULING NO. 309-88 102 (a) 309-88 Gentlemen : This refers to your letter dated May 4, 1988 requesting, in behalf of your client, Cassava Planters & Millers Association of the Philippines, Inc., for a ruling exempting cassava starch from the value-added tax. It is represented that the said association is composed of growers of cassava tubers and/or producers and/or millers of cassava starch; and that cassava starch is a feed item, 95% of which is used in the manufacture of glucose, sage, chicharon and other food products. You also contended that the inclusion of cassava starch among the items subject to the value-added tax will result in the collapse of the cassava industry so much so that hundreds of thousands of small farmers who rely on the industry will be dislocated in their livelihood and wide areas of agricultural lands suitable to cassava tubers will become idle. In reply, please be informed that cassava starch, which involves the complex method of manufacturing as described in your said letter, can no longer be considered in its original state; hence, the same is subject to 10% value-added tax imposed by Section 102(a) of the Tax Code as amended by Executive Order No. 273. However, the sale of cassava tubers by the growers and/or purchasers to the manufacturer of cassava starch is exempt from VAT pursuant to Section 103(b) of the same Code. cdta Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner