VAT Ruling No. 066-91

June 27, 1991 VAT RULING NO. 066-91 Glenn Merchandising Corporation 31 Marvex Drive, Balintawak Quezon City, Metro Manila Attention: Mr . Lee Cho General Manager Gentlemen : Referring to your letter-inquiry, dated January 3, 1991 please be informed that agricultural and marine food products in their original state are exempted from the 10% Value-Added Tax under Section 103(b), NIRC. Said products are considered remaining 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. Polished and/or husked rise, corn grits and raw cane sugar shall be considered in their original state for purposes of the said law. This part of the law is limited in application it refers only to such which is intended as food for human consumption. llcd Subject to your representation that the same are in their original state and are food for human consumption, the following may be considered VAT-exempt under Section 103(b), NIRC: 1. Green peas 7. Kidney beans 2. Dried peas 8. Unpopped popcorn 3. Mongo peas 9. Sunflower seed 4. Mung beans 10. Pepper 5. Navy beans 11. Wheat grains 6. White beans " Ordinary salt " had been ruled as VAT-exempt under VAT Ruling No. 16-88, issued on February 5, 1988. The " pepper " listed above shall be classified as in its original state provided, the same has not undergone food processing, provided, further that, if the same were subjected to simple processes, the type of processing are limited to the aforementioned simple processes. Otherwise, the same may no longer be considered agricultural food product in its original state. (see also BIR Ruling No. 092-88 dated March 10, 1988 ) For lack of information in your query, this Office cannot rule vis-a-vis (1) "Chick peas"; (2)"Dun Peas"; (3)"Lucerne"; (4)"Barley"; (5)"Flowers"; (6)"Safflowers"; and (7)"Millet". Please be informed, however, that if the said agricultural products are not food for human consumption the same shall not be VAT exempt under Section 103(b), NIRC, even if they are in their original state. Thus, when the same or some of them are actually used as supplements or ingredients of "animal feeds" the same shall not qualify for VAT exemption under this part of the law. (See VAT Ruling No. 244-90, issued on December 28, 1990). " Chick peas ", if intended as supplement or ingredients to animal feeds, shall not be VAT-exempt since only animal and poultry feeds, as "finished product", qualifies for VAT exemption under Section 103(c), NIRC. (VAT Ruling No. 244-90) " Whole oats " are husked wheat, hence, not in their original state. Husked (or milled grains) are not considered in their original state except only vis-a-vis "rice, corn grits, and raw cane sugar". (supra) " Raw cotton " are not agricultural food product but are rather non-food product. Sale thereof is only VAT-exempt provided the seller is its primary producer. (Sec. 103(a), NIRC). The same rule applies to "rawhides" since the same are not also food for human consumption. " Fertilizers " are VAT-exempt in all stages of sale under Section 103(c), NIRC. casia Very truly yours, JOSE U. ONG Commissioner of Internal Revenue