Tax Liability of an Exporter-Trader of Copra, Crude Coconut Oil and Copra Pellets

July 15, 1988 BIR RULING NO. 328-88 100 (a) (1) 000-00 328-88 Gentlemen : This refers to your letter dated June 2, 1988 stating that Car-Phil Company Inc. is a duly registered exporter-trader of copra, crude coconut oil and copra pellets; that aside from engaging in the exportation and trading of coconut products, you also sell locally crude coconut oil intended as food additives and feeds for livestock; that your company has no oil mill, instead, you hire an oil mill and pay the corresponding toll crushing fees as payment for converting copra into crude coconut oil and copra pellets; and that in the milling process, no other chemicals are added except the copra itself. It appears also that you are VAT-registered. Based on the foregoing representations, you now request for a ruling on your liability to the value-added tax. In reply, please be informed that pursuant to Section 103(b) of the Tax Code, as amended by Executive Order No. 273, your sale of copra which has been placed in the category of agricultural food products in its original state is exempt from VAT in all stages of sale and distribution. However, your local sales of crude coconut oil and copra pellet are subject to VAT at 10% pursuant to Section 100(a) of the same Code because the same is no longer in its original state, but a processed food product. On the other hand, your export of coconut oil is subject to VAT at 0% pursuant to Section 100(a)(1) also of the same Code. This serves as your authority to export coconut oil without the payment of the VAT. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner