BIR Ruling No. 654-2020

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE

BUREAU OF INTERNAL REVENUE

Quezon City

Section 1091A),NIRC of 1997, as amended

BIR Ruling No. 557-2019 VAT-0654-Z0ZU DEC 0 2 2020

NATIONAL DAIRY AUTHORITY BAI Compound, Visayas Avenue Diliman, Quezon City

Attention: Mariliyn B.Mabale

Administrator

Madam:

This refers to your letter dated February 20, 2020 requesting for a confirmatory ruling

on the tax exemption relative to the importation of dairy animals.

It is represented that the National Dairy Authority (NDA) purchased one thousand

eight-hundred fifty seven (1,857) dairy animals from Australian Rural Exports, Pty, Ltd. (AREPL) through General Mercantile Company Inc., (GEMCO), detailed as follows:

Number of Heads 717 heads 50 heads Purebred Holstein Heifers (Pregnant) Holstein X Jersey Heifers (Pregnant) Description

565 heads 375 heads HolsteinX Jersey Heifer Crosses (50:50Pregnant) Holstein X Jersey Heifers (Pregnant)

150 heads Purebred Holstein Heifers (Pregnant)

Total: 1,857 heads

The transaction had been exempted from customs duties by the Department of Finance

(DOF) by virtue of the Customs Modernization and Tariff Act. However, the DOF did not

include from the exemption the payment of value-added tax (VAT) incidental to the

importation. Thus, this request.

In reply, please be informed that Section 109 (1)(A) of the National Internal Revenue

Code (NIRC) of 1997, as amended, provides that:

"Sec. 109. Exempt Transactions. -

(1) Subject to the provisions of Subsections (2) hereof, the following

transactions shall be exempt from the value-added tax:

(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. "

g.

VAT-0654 -2020

DEC '02: 2020

xxxx- xxxx.xxxx

Based from the abovementioned provision, the" exemption on VAT extends to sale or importation of livestock' which includes, among others, cows, bulls and calves.

tasked to ensure the accelerated development of the Philippine dairy industry.2 Accordingly, one of their function is to assist in the purchase, importation, propagation, storage distribution The NDA is mandated to serve as the central policy determining and directing body

and sale of dairy animals, semen, forage seeds, fertilizers veterinary supplies, dairy equipment and engineering supplies and such other inputs as may be needed by the.dairy industry wherein

the transaction was grounded.

In view of the foregoing, this Office hereby confirms that the importation by NDA of the One Thousand Eight-Hundred Fifty-Seven (1,857) dairy animals is exempt from VAT

pursuant to Section 109. (1)(A) of the NIRC of 1997, as amended,:subject to the conditions

enshrined in Section 18 of the National Dairy Development Act of 1995. Please note that the

taxtexemption granted herein is only limited to such transaction.:

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

considered null and void.

Very truly yours,

eeam

CAESAR R.DULAY Commissioner of Internal Revenue

038151

1 Section 9 (b)(2) of revenue Regulation No. 5-87 2 The NDA Mandate, National Dairy Authority Website (nda.gov.ph)

3 Section 6 (b) of the National Dairy Development Act of 1995, Republic Act (R.A.) 7884

pg. 2