VAT Ruling No. 020-03

February 26, 2003 VAT RULING NO. 020-03 109 of R.A. 8345 Abalos & Sons Agro-Industrial Corporation (ASACOR) No. 198 M. Paterno Street San Juan, Metro Manila Attention: Mr . Constantino S . Abalos Marketing Manager Gentlemen : This refers to your letter dated August 13, 2002 requesting that your importation of KUHL Brand Fiberglass Egg Washer Poultry Equipment (Model No. KF-400, Serial No. 4-02) be exempted from VAT, based on the following grounds: "1) Said acquisition is exempted from customs duties under Section 109 of Republic Act No. 8345, also known as Agricultural and Fisheries Modernization Act; "2) Said equipment is not intended for resale, as its acquisition is not in the nature or course of the commercial trading. The unit will be utilized directly and exclusively to serve the needs of our company's poultry farm; CScTED "3) Our company who is the consignee is an agriculture-based, non-VAT corporation." In reply, please be informed that your request cannot be granted by this Office for lack of legal basis. Under Section 109 of the Republic Act No. 8435 otherwise known as the "Agriculture and Fisheries Modernization Act of 1997," the exemption of an enterprise engaged in agriculture and fisheries covers only the payment of tariff and customs duties for the importation of all types of agriculture and fisheries inputs, equipment and machinery, such as, but not limited to, fertilizer, insecticide, pesticide, tractor, trailers, trucks, farm implements, etc. for the exclusive use of the importing enterprise. Nowhere in the said provision is it stated that the VAT on importation under Section 107(A) of the 1997 Tax Code is included among the exemptions granted to an enterprise engaged in agriculture or fisheries. The fact that your imported Fiberglass Egg Washer is not intended for resale but to be used directly and exclusively to serve the needs of your company's poultry farm, is not of any moment. The VAT under Section 107(A) of the 1997 NIRC is imposed on any importation of goods even if said goods are not to be sold but intended for the personal use of the importer. Very truly yours, (SGD.) JOSE MARIO C. BUAG, JR. Deputy Commissioner Legal & Inspection Group