VAT Ruling No. 058-89

February 17, 1989 VAT RULING NO. 058-89 103-(B)-000-00-058-89 Policarpio C. Tolentino Certified Public Accountant Remarville Subdivision Bagbag, Quezon City S i r s : This has reference to your letter dated October 5, 1988 requesting for a ruling on whether or not the sale of cocoa butter and cocoa powder is subject to the value-added tax (VAT). In reply, please be informed that pursuant to Section 103(b) of the Tax Code, as amended by E.O. No. 273, exempt transactions include the sale of agricultural products in their original state. Products shall be considered as being in their original state if they have undergone only simple processes of preparation or preservation for the market, such as freezing, drying, salting, smoking or stripping. Therefore, processing by machinery of cocoa beans into cocoa butter and cocoa powder cannot be considered as simple processing for purposes of exemption from the VAT; hence the sale of the said products is subject to 10% VAT. Please be guided accordingly. Very truly yours, VICTOR A. DEOFERIO, JR. Deputy Commissioner