VAT Ruling No. 044-03

October 13, 2003 VAT RULING NO. 044-03 106 (A) and 107(B) Hi-Grade Feeds Corporation 180 Reparo St. Baesa Road Caloocan City Attention: Mr. Efren A. Madulid, Sr. President/General Manager Gentlemen : This refers to your letter dated December 26, 2002 requesting for exemption from payment of the value added tax (VAT) on the sale of your manufactured feed products. It is represented that HI-GRADE FEEDS CORPORATION with TIN-000-610-796-000 is engaged in livestock (feeds manufacturing and piggery) business; that you manufacture the following products: Chicken Layer Booster Mash, Chick Starter Mash, Broiler Starter Pellet, Hog Grower Mash, Quail Starter Mash, Poultry Growing, Duck Layer Booster Pellet, Hog Breeder Mash, Quail Layer Booster, Master, Broiler Starter Mash, Broiler Finisher Pellet, Hog Finisher Mash, Hog Grower Pellet, Broiler Finisher Mash, Hog Concentrate, Gestating Mash, Hog Finisher Pellet, Chick Booster Mash, Hog Breeder Pellet, Hog Starter Mash ; and that in support of your request, you submitted, among others, xerox copies of your BIR Registration Certificate No. 4R0000157533 dated January 2, 1996 as engaged in hog farming and production of prepared animal feeds, and Certificate of Registration No. (M)-33 issued by the Bureau of Animal Industry, as a Livestock and Poultry Feeds manufacturer. In reply, please be informed that Section 109 of the Tax Code of 1997 (then Section 103 of the Tax Code, as amended by R.A. 7716, and further amended by R.A. 8241), provides as follows: "Sec. 109. Exempt Transactions . The following shall be exempt from the value-added tax: "(a) . . . "(b) . . . "(c) 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 therefore. "Products classified under this paragraph and paragraph (a) shall be considered in their original state even if they undergo 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. STCDaI "(d) Sale and 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);" Based on the foregoing, sale and importation of livestock, as well as livestock and poultry feeds, is exempt from the payment of the 10% VAT imposed under Sections 106(A) and 107(B) of the Tax Code of 1997. Since HI-GRADE FEEDS CORPORATION is engaged in hog farming and also a producer of the abovementioned prepared animal feeds, it is exempt from the payment of 10% VAT on such activities. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it shall be disclosed that the facts are different, then ruling shall be considered null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group