BIR Ruling No. 333-2016

BUREAUOVINTERNALREVENUF REPUBLICOPTHE PHHLIPPINES DEPARIMENTOF FINANCE Cuczon City

Bureuu of Internal Revenue Ruting

Sme 27 b. 6 8424.as amended Section 109.RA 4-201 BIR RR.ND 333-2016 Person to ContactChief.Law Division Tel Nos.926-55-36/927-09-63

LOSRICOSCOMPANIA CORP E2102-B/C.2Fioor Philippine Stock Exchange Center Exchange Road.Ortigas.Pasig Citv

AuentionHARRY GL

Chairman

Gentlemen:

whether cocosugar is covered by the exemption in Section109(Aas implemented by Section 4.109-1Bofevenue Regulation No.16-2005.as amended. This refers to your tetter dated March S.2013.reouesting for a clarification on

Documents submitted show that Los Ricos Comoania Corp. with Taxpayers Identification No. is a domestic oorporation registered with the Sccurities and Exchange Commission(SEC under SEC Registatio No. that the

purposes for which it is formed are:

That the primary purpose of this corporation is to engage in the business of trading Cocosugar and its by products.conetic nd/or expon

Thathe sccondary puroose of tis corporation is to engage in the business of trading eoods such as garmens and accessories and househota goods on a wholesaie and commission bas

Section 109 of the National Internal Revenue Code of 1997.as amended (Tax Code). provides

19 ExempeTromsuetuax. - ubject tothe provsicns of section 1neneof.the rollowira iensations shall n exenpt tom the valee added tax

ASae cr inpevtion pf acuhural nnd

poltry of kid generatly used as o- yiclding or marine food producis in thcir origiral aatetivestock and

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stock and genetic materials therefor producing foods for human consurptionand breecing

considered in their original state even if they have "Prodacts classified under this paragraph shall be

undergone the simple processes of peparation or preservation for the market. such as freezing.drying

salting.broding.roasting.smoking or stripping.Polished

in thcir original state(Emphasis surplied and/or husked rice,corn grits,raw cane sugar and molasses,ordinary salt,and copra shall be considered

The provision above quoted defines the term original state" in two ways.First in the first sentence, that the term includes an article which is in its original state.

materials that have undergone the simple processes of preparation or preservation for the market. such as freezing. drving. salting. broiling. roasting. smoking or stripping. unprocessed and not a finished oroduct or a by-product of a raw material.This includes Thus.what would be outside of the scope of the term "cimpie process"is the kind of

physical or chemical process which would aher the exterior texture or form or inner Substance of a product in such a manner as to prepare it for special use to which it could not have been put in its original form or cond tion.

The second definition.a definition by enumeration gives a list of products which are considered per se.as m its original state.

Corp.coconut sap or nectar undergoes the foltowing processes for the production and As represented in the tiow char attached to the letter of Los Ricos Compania

extraction of cocosugar

.Cocomu Sap or Necar

3.Sap sofies w coo 2. Sap is boled

4.Coconut sugor is dried and strained

of the lineimple proxess of prenaratien oservation fothe marketThe product nectar to produce cocona uga is nct one thet mav Se ccnsidered within the purview produced by the above process s aiready a tinished product. From the foregoing. it is obvious that the process mdergone by coconut sap or

cocosugar.The ony kird ef sugar that is exempt from VAY is raw cane sugar in the exclusio umus est exetusto alrerns may be arolied n this case.In conjunction to this exemption from taxaon is not fvereo andshad bo cosrucd srgissmi/uris against form of muscovado sugar sc arified in Revenue Regalions No.4-2015.The rule of Neither dees coosusor ong to he econd defioion.The list does not include

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Los Ricos Compamia Corp 332016 629-016

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the taxpaver and lieral in favor of the taving authority.-Since the list does not include

cocosugarwe cannol consrue that ii helongs to the list

t must also be understood that the exemption in Section 109A is not given

to a specific laxpayer but to the nature of the transaction involved.Accordingly.and

provided that the subject agricuitural and marine products are in their original state and

are food for human consumption the sale of the above products as qualified are

considered VATexempt

From the foregoing, we hereby rule that the sale of cocosugar is not among those which are exemoted underSection 09()Aand that no blanket tax exemption for any

entity is allowed bv the said provision Thus.the change of registercd tax-type of Los Ricos Compania Corp.to VAT-XEMPT cannot be allowed.Thusyour request is

hereby denied.

Please be guided accordingy

Very truly yours.

KIVSJACINTO-HENARES Commissioner of internal Revenue

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JUN 2 7 2016

K I-nra

Incvs.Commission on Aud20 RA 726Comm 21 SCRA 180ManilarCome67SCRASt Philippine Petroleun orporatiom Municpalty f PillaRiat198 SCRA 82Caltex Phiippines ssionur of latermal Kevenue vs.fierrere