Internal Revenue Commissioner Kim Jacinto-Henares has imposed an additional requirement before those who sell or manufacture livestock feeds can avail themselves of the exemption from value-added tax (VAT) granted to them by the Tax Code.
Henares issued Revenue Memorandum Circular 55-2014 to require the sale of livestock feeds to have a certification from the Food and Drug Administration that such feeds are unfit for human consumption.
Henares issued the order after finding out that some ingredients of livestock feeds can also be used for the production of food for human consumption, and that these ingredients are being sold without paying the corresponding VAT.
Under the Tax Code, the 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 among those that are exempt from VAT.
The VAT-exemption only apply to agricultural products and does not apply to “specialty feeds,” which refer to non-agricultural feeds or food for racehorses, fighting cocks, aquarium fish, zoo animals and other animals generally considered as pets.
“To give effect to the legislative intent that only livestock and poultry feeds or ingredients used in the manufacture of finished feeds are exempted from VAT, it is hereby clarified that the sale or importation of ingredients which may also be used for the production of food for human consumption shall be subject to VAT,” the new order said.
“Thus, for the sale or importation of livestock and pultry feeds or ingredients used in the manufacture of finished feeds to be exempt from VAT, there must be a showing that the same is unfit for human consumption, or that the ingredient cannot be used for the production of food for human consumption as certified by the Food and Drug Administration,” it added.
Written by: David Cagahastian