10% VAT Imposed on the Shipment of Skimmed Milk by a European Economic Community

October 4, 1988 BIR RULING NO. 477-88 101 (a) 000-00 477-88 Gentlemen : This refers to your letter dated August 26, 1988 stating that a European Economic Community is planning to ship containers of skimmed milk for free distribution to our poor and less fortunate brothers; that the condition of said donation is that it will be exempted from customs duties and value-added tax. You are requesting for opinion as to whether skimmed milk is exempt from the value-added tax since you believe that the same is an agricultural product in its original state as defined under Section 103(b) of the Tax Code, as amended by Executive Order No. 273. In reply, please be informed that your query is answered in the negative. The fact that milk undergoes the process of skimming to remove the impurities and then vacuum-dried so it can be packed in bags to simplify movement to the market but retaining the vital ingredients thereof, does not appear to be a simple process of preparation or production. Such being the case, the intended shipment of skimmed milk by a European Economic Community is subject to 10% value-added tax pursuant to Section 101(a) of the Tax Code as amended, to be paid before the release of the same from customs custody. As regards customs duties, please direct your request to the Commissioner of Customs who has jurisdiction on the matter. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner