VAT Ruling No. 008-02

March 6, 2002 VAT RULING NO. 008-02 Section 109 (d) VAT Ruling No. 028-98 Syntengco Enterprises Corporation No. 10 Resthaven Street, SFDM Quezon City Attention: Mr. Renan M. Del Rosario Senior Vice President Gentlemen : This refers to your letter dated January 07, 2001 requesting for a certification to the effect that Copper Sulfate Pentahydrate used as fertilizer and as a mineral supplement in animal feeds is exempt from the Value Added Tax (VAT) under Section 109 (d) of the 1997 Tax Code. In reply, please be informed that Section 109(d) of the Tax Code of 1997 provides that sale or importation of fertilizers, seeds, seedlings and fingerlings; fish, prawn, livestock and poultry feeds, including ingredients, whether locally produced or imported, used in the manufacture of finished feeds (except specialty feeds for race horses, fighting cocks, aquarium fish, zoo animals and other animals generally considered as pets) shall be exempt from the value-added tax (VAT). The foregoing provision refers to three transactions as being exempted from VAT, namely: 1. Sale or importation of fertilizers, seeds, seedlings and fingerlings; 2. Sale or importation of fish, prawn, livestock and poultry feeds; and 3. Sale or importation of feed ingredients used in the manufacture of fish, prawn, livestock and poultry feeds. Item 3, clearly refers to ingredients used in the manufacture of animal feeds. And the terms 'ingredients' or 'feed ingredients' are defined under Republic Act No. 1556, as amended by Presidential Decree No. 7, and implemented by Administrative Order No. 35 dated September 23, 1975, as "any single article of feed or feeding stuff which enters into the composition of a ration, concentrate, or supplement." Such being the case, while the terms 'feed additives' and 'feed supplements' are not expressly mentioned in the law they still fall within the purview of the term 'feed ingredients'. It is significant to note that since the manufacture, importation, sale or distribution of feeds or feeding stuff requires prior registration and permit from the Bureau of Animal Industry (BAI) under Republic Act No. 1556, as amended by Presidential Decree No. 7, the certification on the nature and composition of the commodities/items as stated in the registration and import permit issued by BAI will govern the classification of the said items for purposes of VAT under Section 109(d) of the Tax Code of 1997. Since the Bureau of Animal Industry has classified Copper Sulphate Pentahydrate as feed additives, your importation of the said articles is exempt from the payment VAT. Accordingly, this ruling shall serve as authority of the Bureau of Customs to release the above importation, which shall be in lieu of the issuance of the Application to Release Imported Goods (ATRIG). This ruling is being issued on the basis of the facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P GUEVARA Deputy Commissioner Legal and Inspection Group