BIR Ruling No. 673-2020

BUREAUOF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE Quezon City

Sec.1091Aof the Tax Code of 1997; BIR Ruling No.107-19 VAT-0673-2020 DEC 2 2 2020:

Matandang Balara 3, Quezon City HEALTHY TOP HARVEST DISTRIBUTION, INC. 2/F Parian, Comm'l Complex, Commonwealth Ave..

Attention : BRYAN DU BALADAD President

Gentlemen:

to Section 109 (1)(A) of the National Internal Revenue Code of 1997 (Tax Code), as on behalf of HEALTHY TOP HARVEST DISTRIBUTION, INC. for value-added tax amended. (VAT) exemption on its importation and distribution of frozen fruit and vegetable, pursuant This refers to your letter dated September 23, 2019, with attachments, requesting

insofar as maybe permitted by law, all kinds of agriculture products. is a corporation organized and existing under the Philippine laws; that it is duly registered DISTRIBUTION, INC., with Taxpayer's Identification Number (TIN) with the Securities and Exchange Commission (SEC) under SEC Reg. No. and that as shown in its Articles of Incorporation, its primary purpose is to engage in, conduct and carry on the business of buying, selling distributing, marketing in wholesale Documents. submitted show. that HEALTHY TOP' i HARVEST

a registered Importer of the below list of fruits with Bureau of Plant Industry with Registration No. Records also show that HEALTHY TOP HARVEST DISTRIBUTION, INC. is valid until October 24, 2022.

Raspberry, Mango, Banana) Fruit Mix 1 (Strawberry. Fruit Mix 3 (Strawberry, Fruit Mix 2 (Blackberry Raspberries Crumble Blueberry, Banana) Blueberry, Banana) Strawberries 4-Berry Mix Blackberries Blueberries Cranberries Raspberries Product Lychee Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Type Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Origin

Apricot Halves Jackfruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Various Countries Various Countries

Black Currants Individual Quick Frozen Fruit Various Countries C

Page 2 of 4 HEALTHY TOP HARVEST DISTRIBUTION,INC 673-282 DEC 2 2 2020

Passionfruit Pulp w/o seeds Passionfruit Pulp w/ seeds Organic Strawberries Organic Blackberries Dark Cherries (Sweet) Organic Cranberries Organic Raspberries Pumpkin Butternut Organic Blueberries Organic Berry Mix Red Cherries (Sour) Corn Supersweet Strawberry Puree Raspberry Puree Spring Harvest Mango Chunks Avocado Puree Carrot Diced Banana Puree Boysenberries Mango Puree Avocado Pulp Green Beans Baby Carrot Green Peas Red Currants 7-Berry Mix Plum Halves Kiwi Puree Acai Puree Spinach Avocado Rhubarb Banana Mango Corn Kale Individual Quick Frozen Organic Fruit Individual Quick Frozen Organic Fruit Individual Quick Frozen Organic Fruit Individual Quick Frozen Organic Fruit Individual Quick Frozen Organic Fruit Individual Quick Frozen Organic Fruit Individual Quick Frozen Organic Fruit Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Individual Quick Frozen Fruit Puree Individual Quick Frozen Fruit Puree Individual Quick Frozen Fruit Puree Individual Quick Frozen Fruit Puree Individual Quick Frozen Fruit Puree Individual Quick Frozen Fruit Puree Individual Quick Frozen Vegetable Individual Quick Frozen Fruit Puree Individual Quick Frozen Fruit Pulp Individual Quick Frozen Fruit Pulp Individual Quick Frozen Fruit Pulp Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Individual Quick Frozen Fruit Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries

Chickpea -Garbanzos Cauliflower Edamame Broccoli Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Fresh Organic Various Countries Various Countries Various Countries Various Countries

Green Beans Individual Quick Frozen Vegetable Various Countries

Carrot Diced Baby Carrot Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable (Conventional) (Conventional) Various Countries Various Countries

Corn Supersweet Individual Quick Frozen Vegetable (Conventional) Various Countries

(Conventional) Kale Individual Quick Frozen Vegetable Various Countries

Green Peas Individual Quick Frozen Vegetable (Conventional) (Conventional) Various Countries

Page 3 of 4 HEALTHY TOP HARVEST DISTRIBUTION, INC 05 DEC 2 2 2020 2028

Pumpkin Butternut Spring Harvest Cauliflower Edamame Broccoli Spinach Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable Individual Quick Frozen Vegetable (Conventional) (Conventional) (Conventional) (Conventional) (Conventional) Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries

(Conventional)

Chickpea -- Garbanzos Black Fungus Corn Individual Quick Frozen Vegetable Fresh (Conventional) Fresh (Conventional) Various Countries Various Countries Various Countries

Bolletus Edulls Mushroom Individual Quick Frozen Vegetable (Conventional) Various Countries

(Conventional) Champignon Mushroom Individual Quick Frozen Vegetable Various Countries

(Conventional) Oyster Mushroom Individual Quick Frozen Vegetable Various Countries

Shiitake Mushroom Individual Quick Frozen Vegetable (Conventional) Various Countries

Durian Individual Quick Frozen (Conventional) Various Countries

In reply, please be informed that Section 109 (1)(A) of the Tax Code, as amended by Republic Act No. 9337, provides for the exemption from VAT on the sale or importation

of frozen fruits and vegetables. The aforesaid provision reads, viz.:

SEC.109. ExemptTransactions. (1) Subject to the

provisions of subsection (2) hereof, the following transactions shall be

exempt from the value-added tax:

XXX XXX XXX

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. "

"Products classified under this paragraph and paragraph (a)

shall be considered 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. Polished and/or husked rice, corn grits, raw cane sugar and molasses,

and ordinary salt shall be considered in their original state. "

Based on the above-cited provision, the importation and distribution/sale of

agricultural products in their original state for human consumption, is considered exempt

from 12% VAT pursuant to Section 109 (1)(A) of the Tax Code, as amended. Agricultural

products are considered remaining in their original state even if these have undergone the

simple process of preparation or preservation for the market, such as freezing, drying. agricultural product in its original state. Moreover, the VAT exemption is limited in application -- it refers only to such products which are intended as food for human consumption. salting, broiling, roasting, or stripping. The type of processing is limited to the aforementioned simple processes. Otherwise, the same may no longer be considered HEALTHY TOP HARVEST DISTRIBUTION, INC. Page 4 of 4 0673-2020 DEC 2 2 2020

Section 109(1) (A) of the Tax Code, as amended. It is understood that the importation of agricultural product in its original state and intended for human consumption, the importation and distribution/sale thereof by HEALTHY TOP HARVEST DISTRIBUTION, INC. is exempt from the twelve percent (12%) VAT pursuant to such product shall be covered by valid and existing authority to import issued by the Bureau of Plant Industry. -In view of the foregoing, since frozen fruits and vegetables are basically an

acts of preparation or preservation as the same already partake the nature of a full manufacturing process which transforms fruits, etc. into an entirely different form such as same is subject to twelve percent (12%) VAT imposed under Sections 106 (A) and 107 (A) into purees or concentrate are not covered by Section 109 (1)(A) of the Tax Code, as amended. Such being the case, your request for exemption'from VAT on the sale and/or importation of the below products is hereby denied and the sale and/or importation of the of the Tax Code, as amended. However, products which undergo the processes which are by no means simple

Strawberry Puree Raspberry Puree Avocado Puree Banana Puree Mango Puree Kiwi Puree Acai Puree Product Individual Quick Frozen Fruit Puree Individual Quick Frozen Fruit Puree Individual Quick Frozen Fruit Puree Individual Quick Frozen Fruit Puree Individual Quick Frozen Fruit Puree Individual Quick Frozen Fruit Puree Individual Quick Frozen Fruit Puree Type Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Various Countries Origin

However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented.

Very truly yours,

nasal

K-I-JAC Commissioner of Internal Revenue CAESAR R. DULAY 038772 Q

C