VAT Ruling No. 023-96

September 23, 1996 VAT RULING NO. 023-96 Sec. 103 (c)-000-023 TSB Enterprises, Inc. 148 Pinkian St., Philand Subd. Pasong Tamo, Tandang Sora Quezon City Attention: Ms . Purificacion Ramoso Accountant Gentlemen : This refers to your letter dated January 22, 1996, requesting for exemption from the value-added tax of your sale of the following agricultural food products LLpr Nuts Roasted peanuts, roasted cashew nuts; Eggs Frozen fresh eggs, Frozen fresh egg yolks; Fruits Frozen banana preserve, frozen preserved camote, frozen ube preserve, frozen buco preserve, frozen macapuno preserve, frozen mangosteen preserve, frozen strawberry preserve, frozen preserve mongo beans, frozen preserved white kidney beans, frozen preserved kaong, frozen preserved langka, frozen pineapple preserve; Vegetables Frozen carrot cubes/strips, frozen ground carrots, frozen ground bell pepper, frozen corn kernels. In support of your request you submitted process flow charts for the production of above items. Accordingly, nuts are sorted and weighed, roasted, chopped/grounded, packed/sealed/labeled then stored. Eggs are sorted and weighed, washed, cracked, preserved with salt or sugar, packed/sealed/labeled then stored in the freezer. Fruits are sorted and weighed, washed, peeled/cubed/grounded, preserved in syrup, packed/sealed/labeled, and then stored in the freezer. Vegetables are sorted and weighed, washed, peeled/cubed/grounded, blanched, packed/sealed/labeled and frozen. cdti In reply, please be informed that Sec. 103(c) of the Tax Code, as amended by R.A. 7716, otherwise known as the Expanded Value-Added Tax Law, provides that the sale or importation of agricultural and marine food products in their original state, except importation of meat; livestock and poultry of a kind generally used as, or yielding or producing food for human consumption; and breeding stock and genetic materials therefor shall be exempt from the VAT. Sec. 4.103-1-B (c) of Revenue Regulations No. 7-95 provides that meat, fruit, fish, vegetables and other agricultural and marine food products 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, smoking or stripping, including those using advanced technological means of packaging, such as shrink wrapping in plastics, vacuum packing, tetra-pak, and other similar packaging methods. Considering the fact that the above items have undergone merely simple processes for preparation and/or preservation for the market, they remain food products still in their original state; hence, the sale thereof is exempt from the VAT pursuant to Sec. 103 (c) of the NIRC, as amended. This ruling is issued on the basis of the foregoing 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. casia Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue