Under Section 109 (B) of the Tax Code, sale or 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 are exempt from VAT.
However, since the manufacture, importation, sale or distribution
of feeds or feedstuff require prior registration and permit from the Bureau of
Animal Industry (BAI) under Republic Act No. (RA) 1556, as amended by
Presidential Decree No. 7, the certification in the nature and composition of
the commodities/items as stated in the registration and import permit issued
by BAI will govern the classification of the said items for purposes of VAT
under Section 109(1)(B) of the Tax Code, as amended.
Considering that
the BAI has issued a certification that the scrap products are no longer fit
for human consumption and are indeed ingredients in the manufacture of feeds,
its sale shall be exempt from the 12% VAT imposed on the sale of goods under
Section 106(A) of the Tax Code, as amended.
(BIR Ruling No. 371-2013, October 10, 2013)
Tax
Brief – December 2013
Punongbayan
and Araullo
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