VAT Ruling No. 077-99

August 6, 1999 VAT RULING NO. 077-99 Sec. 109 (c) VAT Ruling Nos. 095-90; 187-88; 023-91; 195-88 077-99 Pio De Roda and Associates Law Office Penthouse, LGI Building, Ortigas Avenue Greenhills, San Juan 1502 Metro Manila Attention: Atty . Alfredo Pio de Roda, Jr . Gentlemen : This refers to your letters dated August 4 and 5, 1999, requesting in behalf of your client, GRAND EAST EMPIRE CORPORATION, for a ruling that the latter's importation of the following agricultural food products are exempt from Value Added Tax viz: Dried Lily Flowers Sultana Raisins Dried Black Fungus cdlex Dried Mushrooms Kasuba Mung Beans Dried Green Peas Dried Chick Peas (Garbanzos) Sesame Seeds Dried Sweet Plum It is represented that the above commodities are imported in bulk in their original state and pursuant to Section 109(c) of the Tax Code of 1997, it is your opinion that they are exempt from the payment of VAT on importation. In reply, please be advised that of the above products, the following have already been declared as agricultural food products and/or exempt from VAT: a. Raisins (Vat Ruling No. 095-90 dated April 27, 1990); b. Mung Beans (Vat Ruling No. 187-88 dated May 30, 1988); c. Green Peas (Vat Ruling No. 023-91 dated April 13, 1991); d. Dried Chick Peas or Garbanzos (Vat Ruling No. 195-88 dated May-30, 1988); e. Sesame Seeds (BIR Ruling No. 118-86 dated July 24, 1986). With respect to Dried- Lily Flowers, Dried Black Fungus, Dried Mushroom, Kasuba, and Dried Sweet Plum, we take note that they are basically agricultural food products appearing to be in their original state, hence, should likewise be exempted from the 10% Value-Added Tax under Section 109(c) of the Tax Code of 1997. The phrase "original state" covers agricultural products which are basically the same in physical appearance and composition, as when the same was harvested from the tree or soil. (Vat Ruling No. 023-91 dated April 3, 1991) cdll Accordingly, said agricultural food 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, broiling, roasting, smoking or stripping. 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. Moreover, this part of the law is limited in application it refers only to such products which are intended as food for human consumption. Hence, subject to your representation that the same are in their original state and are food for human consumption, the importation of all the above products are hereby considered VAT exempt. This ruling is being issued on the basis of the facts, as represented. However, if upon investigation, it will be discovered that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Local & Enforcement Group