VAT Ruling No. 020-00

May 11, 2000 VAT RULING NO. 020-00 Section 109 (d) 028-97 Purefeeds Corporation Ground Floor, Doa Rosita Building 2025-2031 Ipil Street Sta. Cruz, Manila Attention: Jomerito S . Soliman Gentlemen : This refers to your letter dated March 2, 2000 requesting that your importation of broken rice or broken cereal/middling which is said to be a raw material for the production of quality feeds, be exempted from Value-Added Tax. In support of your request, you have attached copies of the following: 1. Certificate of Registration No. S-442 with the Bureau of Animal Industry; prcd 2. Classification as to import duty by the Tariff Commission; 3. Import Permit from the Department of Agriculture; 4. Certification from the Bureau of Animal Industry (BAI) dated March 17, 2000 certifying that "Broken Rice for Feeds" are "Feed Ingredients" intended for manufacturing purposes. In reply, please be informed that Section 109(d) of the Tax Code of 1997 provides that the " 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 finished feeds (fish. prawn, livestock and poultry feeds) except specialty feeds . It is significant to note that since the manufacture, importation, sale or distribution of feeds or feeding stuff require prior registration and prior 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 exemption under Section 109(d) of the Tax Code of 1997. (BIR Ruling No. 028-98 dated September 15, 1998). It is likewise worthy to state that this Office has previously ruled that the importation of polished and/or husked rice, even if classified as agricultural food product under then Section 103(c) of the NIRC (now Section 109(c)), are exempt from the value added tax (VAT Ruling No. 028-97 dated April 1, 1997). cdlex Accordingly, the importation of "Broken Rice for Feeds" or "Broken Cereals/Middlings" which is certified as "feed ingredients" by the BAI, shall be exempt from the imposition of VAT. However, it is required that in all cases of importation of VAT-exempt goods, the same shall not be released from customs custody unless a duly approved Authority to Release Imported Goods (ATRIG) is secured from the Revenue District Officer of the place where the port of entry is located. This ruling is being issued on the basis of the foregoing facts as represented. If upon investigation, it shall be disclosed that the facts are different, then this ruling shall be rendered null and void. Very truly yours, (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue