GONZALES, CLARISSE S.

CHAPTER 8
VALUE ADDED TAX
SUMMARY

VAT EXEMPT SALES

(SECTION 109 NIRC, as amended under RA 10963- TRAIN Law; RR 13-2018)

The vat exempt transactions provided in the Tax Codes

A. “Sale or importation of agricultural 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.

Example of Agricultural and Marine Food Products in their original state

AGRICULTURAL
 Polished/husked rice
 Corn grits
 Raw cane sugar & molasses
 Copra
MARINE
 Fish
 Crustaceans (Lobster, shrimps, prawns, oysters, mussels, clams, trout,
eels)
LIVESTOCK
 Cows  Pigs
 Bulls  Sheep
 Calves  Goats
  Rabbits
POULTRY
 Fowls
 Ducks
 Geese
 Turkey
VAT EXEMPT SUGAR
RAW SUGAR CANE refers to a sugar produced by simple process of conversion of sugar
cane without the need of any mechanical or similar device.
Under the revised regulation, raw cane sugar refers only to muscovado sugar. Thus, only
raw sugar cane is exempt from vat under the tax code.

SALE OF MARINATED FISH

Sale of marinated fish is not exempt from vat. Laws granting exemption from tax are
construed strictly against the taxpayer.
Exemption from payment of tax must be clearly stated in the language of the law.

EXAMPLES OF TRANSACTIONS SUBJECT TO VAT

1. SALE OF BONSAI
2. SALE OF WOOD
3. SALE OF CANNED PINEAPPLE CHUNKS
4. SALE OF FLOWERS
5. SALE OF REFINED SUGAR

B. SALE OR IMPORTATION OF
 FERTILIZERS
 SEEDS, SEEDINGS AND FINGERLINGS, FISH, PRWN, LIVESTOCK AND POULTRY FEEDS,
including ingredients, whether locally produced or imported, used in the manufacture of
finished feeds, except specialty feeds
EXAMPLES OF TRANSACTIONS SUBJECT TO VAT
1. SALE/IMPORTATION OF V-MIG FEEDS FOR PETS
2. IMPORATATION OF RAW MATERIALS FOR THE FORMULATION OF FEEDS FOR

ANIMALS GENERALLY CONSIDERED AS PETS.