10% Vat on the Sale of Manufactured Food Products

September 15, 1988 BIR RULING NO. 447-88 100 (a) 000-00 447-88 Gentlemen : This refers to your letter dated May 25, 1988, in effect requesting exemption from the value-added tax on the sale of your manufactured food products such as bacon, tenderized raw hams, smoked pork loin, smoked pig knuckles, chorizo and Chinese style raw ham, on the ground that such products merely undergo simple production processes. It is represented that, in the manufacture of said food products, fresh processed meat products are cured in a solution of salt, sugar, nitrite, nitrates and water and then smoked, except chorizo which is cured, seasoned with spices, stuffed in clear collagen and then smoked and dried. In reply, please be informed that among those exempt from VAT are meat products sold in their original state. They are 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, smoking or stripping. [Sec. 9(b)(2), Revenue Regulations No. 5-87] The foregoing production processes undergone by your food products before they are sold do not appear to be simple processes of preparation or preservation. It is noted that before being smoked, the meat products are treated or cured by a solution of salt, sugar and nitrite. To be considered simple process of preparation or preservation, the meat products must undergo only smoking without being treated or cured by said solutions. Such being the case, the aforesaid food products are subject to 10% value-added tax imposed by Section 100(a) of the Tax Code, as amended by Executive Order No. 273. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner