VAT Ruling No. 029-00

August 25, 2000 VAT RULING NO. 029-00 109 (d) 011-99 Sytengco Enterprises Corporation No. 10 Resthaven St. San Francisco del Monte Quezon City Attention: Atty . Jaime Dizon Gentlemen : This refers to your letter dated October 8, 1999 requesting for a reconsideration of BIR Ruling No. 072-99 dated May 24, 1999 wherein this Office ruled that your imported Sodium Chloride/Pure Vacuum Dried (PVD) Iodized Salt is subject to VAT under Sec. 107(A) of the Tax Code of 1997 but exempt from the excise tax imposed under Sec. 151 of the same Code. You contended that since Sodium Chloride/Pure Vacuum Dried Iodized Salt is classified as feed ingredient by the Bureau of Animal Industry (BAI), the same is exempt from VAT pursuant to VAT Ruling No. 028-98 dated September 15, 1998. In support of your stand, you submitted to this Office (1) Copy of your BAI Registration No. s-542; and (2) Certification of the Officer-In-Charge, Animal Feeds Standard Division, Bureau of Animal Industry that Sodium Chloride/PVD Iodized Salt is a registered product used as feed ingredient. In reply, please be informed that Section 109(d) of the Tax Code of 1997 provides that the "sale or importation of fertilizers, seeds, seedling and fingerlings, fish, prawn, livestock and poultry feeds, including ingredients, whether locally produced or imported, used in the manufacture of finished feeds (except specially feeds for race horses, fighting cocks, aquarium fish, zoo animals and other animals generally considered as pets)", is exempt from value-added tax (VAT). The foregoing provision refers to three transactions as being exempted from VAT, namely: 1. Sale or importation of fertilizers; 2. Sale or importation of seeds, seedling and fingerlings; 3. Sale or importation of 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, cocks, aquarium fish, zoo animals and other animals generally considered as pets). The word "ingredients" or "feed ingredients" is 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 food or feeding stuff which enters into the composition of a ration, concentrate, or supplement." ETDHaC It is significant to note that since the manufacture, importation, sale or distribution of feeds or feeding stuff require a prior registration and permit from 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 1997 Tax Code. Hence, if BAI classified the product/commodity as feed ingredient, even if the same is susceptible of multiple usage, it shall be exempted from VAT under the aforecited Section. All others not classified as feed ingredients by BAI will be subject to VAT on their sale or importation (VAT Ruling No. 011-99 dated January 21, 1999). Such being the case, the importation by your company of Sodium Chloride /PVD Iodized Salt certified by BAI as feed ingredient is, therefore, exempt from imposition of the 10% VAT, even if the same as claimed by he Bureau of Customs can also be eaten by human beings. It is of course understood that in all cases of importation of Sodium Chloride/PVD Iodized Salt, the same shall not be released from customs custody unless covered by an ATRIG to be issued by the Revenue District Officer having jurisdiction over the port of entry. This ruling modifies BIR Ruling No. 072-99 dated May 24, 1999 in so far as it held that Sodium Chloride/Pure Vacuum Dried (PVD) Iodized Salt is subject to VAT. Very truly yours, (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue