10% VAT on the Sales of Bagoong

October 14, 1988 BIR RULING NO. 505-88 100 070-88 505-88 Gentlemen : This refers to your letter dated August 1, 1988 stating that since 1986 and 1987 a certain company is engaged in the business of buying bagoong already salted and aged from another company; that later on, it places the bagoong into marketable containers like small tin cans and bottles, to make it more salable; and that you now request opinion on the following queries, viz: 1. As to whether the company is subject to the value-added tax; and 2. As to whether the company is subject to the manufacturer's tax or any other taxes before the effectivity of the Value-Added Tax Law. In reply, please be informed as follows: 1. Effective January 1, 1988, the said company's sales of bagoong which are placed in small tin cans or bottles are subject to the value-added tax of 10% pursuant to Section 100 of the Tax Code, as amended. (BIR Ruling Nos. 019-88 and 070-88) 2. Before the VAT law, bottled or canned bagoong is considered processed fish; hence, classified as an essential article subject to 10% sales tax under then Section 163(2)(a) of the Tax Code, as amended by Executive Order No. 36 (BIR ruling No. 315-87) Likewise, the company is subject to the P200.00 annual fixed tax, pursuant to then Section 161(1) of the Tax Code, as amended by P.D. No. 1994. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner