VAT Ruling No. 013-02

March 6, 2002 VAT RULING NO. 013-02 Section 109 (c) VAT Ruling No. 072-99 Hon. Manuel M. Dayrit, MD., MPH. Secretary of Health San Lazaro Compound Rizal Avenue, Sta Cruz Manila Dear Sir : This refers to your letter dated April 17, 2001 requesting for a clarification as to whether the importation of food-grade iodized salt and subsequent marketing of the same after it has undergone simple process is covered by or exempt from the Value Added Tax (VAT) under Section 109 (c) of the 1997 Tax Code. In reply, please be advised that Section 109 (c) of the 1997 Tax Code provides: "Sale or importation of agricultural and marine food products in their original state, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption, and breeding stock and genetic materials therefor." "Products classified under this paragraph and paragraph (a) shall be 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, broiling, roasting, smoking or stripping. Polished and/or husked rice, corn grits, raw cane sugar and molasses, and ordinary salt shall be considered in their original state;" On the basis of the process applied, salt is no longer in its original state, as it has already been enriched with iodine. Neither does it fall under the definition of mineral products which is defined to mean things produced and prepared in a marketable state by simple treatment processes such as washing or drying, but without undergoing any chemical change or process or manufacturing. (Sec. 151(B)(3), 1997 Tax Code) Such being the case, the importation of Iodized Salt is subject to the 10% value-added tax prescribed under Section 107(A) of the 1997 Tax Code. Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group