VAT Ruling No. 059-03

December 15, 2003 VAT RULING NO. 059-03 Section 109 (cc) VAT Ruling No. 072-99 Aguirre Abao Pamfilo Paras Pineda & Agustin Law Offices Suite 2104 East Tower, Philippine Stock Exchange Center Exchange Road, Ortigas Center, Pasig City Attention: Atty. Vivencio F. Abao Gentlemen : This refers to your letter dated December 3, 2002 requesting exemption in behalf of your client, Arvin International Marketing, Inc., from the Value Added Tax (VAT) on your importation of iodized salt. It is represented that your client intends to engage in the importation of iodized salt; that it is in line with the declared State policy of Republic Act 8172, otherwise known as "An Act Promoting Salt Iodization Nationwide and for Related Purposes" to promote and protect the health of the people, to maintain an effective food regulatory system and to provide the entire population especially women and children with proper nutrition; and that you attached herewith, BIR Ruling No. 114-96 dated October 29, 1996, and a sketch of a Mobile Spray Iodization Machine. IESDCH In reply, please be advised that Section 109 (c) of the 1997 Tax Code being among the transactions exempt from the VAT, provides: "Sale or importation of agriculture 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 therefor." Products classified under this paragraph and paragraph (a) shall be considered in their original state even if they have undergone the simple process 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." On the basis of the process applied, iodized salt is no longer in its original state, as it has already been enriched with iodine. Neither does it fall under the definition of mineral products which is defined to mean things produced and prepared in a marketable state by simple treatment processes such as washing or drying, but without undergoing any chemical change or process or, manufacturing. (Sec. 151(B)(3), 1997 Tax Code) Such being the case, your client's importation of Iodized Salt is subject to the 10% value added tax prescribed under Section 107(A) of the 1997 Tax Code. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group