[0:23]Welcome back to my channel. So, in this particular video, I will be sharing to you the VAT exempt sales and transactions, specifically the first seven in the list of VAT exempt sales and transaction.
[0:39]Under Sections 109A up to 109G of the tax code as shown in your screen.
[0:48]So, sa mga nagpaplano to take the board exam, okay, or those preparing for the board, uh, it is very important that you should be very familiar with all the VAT exempt sales and transactions.
[1:02]Okay? So, sige, let's proceed with the first item in the list of VAT exempt sales and transaction.
[1:09]Actually, we already discussed this initially during our first four videos that I shared to you.
[1:19]Okay. Ah, nagawan ginawa ko na 'to ng mga illustrations sa I think uh, on the second video that I shared sa channel na 'to.
[1:28]But anyway, so, let us proceed again with this particular section, Section 109A.
[1:35]So, sale or importation of agricultural and marine food products in their original state.
[1:42]So, the exemption here is not pertaining only to sale, but likewise to importation.
[1:51]Kaya siya sale or importation ng ano ng agricultural and marine food products in their original state.
[2:00]So, please take note na hindi komo agricultural product 'yan, hindi komo marine product 'yan, exempt na siya.
[2:08]Dapat, aside from 'yan ay agricultural product, marine product, it must be a food product.Agricultural food, marine food.
[2:20]And at the same time, it must be in their original state. So, in simple term, 'yan 'yung mga hindi pa na-process. Okay, ng mga agricultural, marine food products.
[2:33]So, halimbawa, basic example. So, uh, fisherman. Siyempre, nanguha ng mga isda sa dagat, halimbawa, then diretso sa market. 'Yan 'yung example ng marine food.
[2:50]Original state kasi hindi siya processed. Kaya simple guide, the moment that the agricultural marine food product ay processed na, it will no longer fall under this category.
[3:01]Okay? As to when do we say that the agricultural and marine food product ay considered in their original state?
[3:11]So, sige, puntahan natin 'yung item na 'yun, kailan natin sasabihin na original state 'yan, before we proceed to the livestock and poultry products.
[3:19]So, under the applicable revenue regulation, okay, eto 'yung definition ng original state.
[3:28]So, products classified under this exemption such as meat, fruits, and vegetables shall be considered in their original state even if they have undergone the simple processes of preparation or preservation for the market.
[3:51]Kagaya ng freezing. So, siyempre sa supermarket, may mga ganyan, 'di ba? Frozen meat, frozen na isda.
[4:00]So, although frozen, under this category ng VAT exemption, it will still fall under original state.
[4:10]Therefore, VAT exempt pa rin. Kaya pansinin mo next time when you go to supermarket or, uh,
[4:18]and then you, you buy groceries, tapos samahan mo halimbawa frozen meat, frozen fish. And then silipin mo later 'yung resibo mo, you will find out na hindi na-VAT 'yung particular item na binili mong 'yon.
[4:33]Why? Because it is exempt under the law. Okay? So, maliban sa freezing, kasama pa rin sa definition ng original state 'yung drying.
[4:42]Okay? Kaya, uh, drying, salting, so halimbawa, 'yung paborito kong pang-umagahan.
[4:50]Kasi alam n'yo naman, simple lang tayo. Hindi naman natin sinyaman 'yung nag-post sa atin eh, 'di ba?
[4:56]So, ang pang-umagahan ko na paborito, halimbawa, isa sa mga paborito ko ay tuyo. Okay? Dried fish.
[5:05]Samahan mo ng fresh na fresh na kamatis, 'di ba? Of course, the kamatis is original state, and that is an agricultural food. Okay?
[5:14]So, exempt 'yon. And then 'yung tuyo na binanggit ko, is still considered original state, even if nag-undergo 'yan ng drying. Okay?
[5:24]Salting, red egg, oh. Masarap din 'yan pang-umagahan, kasama ulit ng kamatis na fresh na fresh, right?
[5:31]So, 'yung red egg is still under the category ng agricultural food product original state.
[5:39]Broiling, roasting, smoking or stripping, including those using advanced technological means of packaging, such as shrink wrapping in plastics, vacuum packing, tetra-pack, and other similar packaging methods.
[6:14]So, 'di ba? Kung minsan 'yung mga magagandang packaging, makakapal pa tapos pandikit na dikit na siya sa isda o sa meat.
[6:22]Sa-sample-an natin, mag-a-advertise tayo ulit. Ah, halimbawa, Pampanga's Best. 'Di ba? Kaya maganda ang packaging niyan.
[6:29]Huwag lang 'yung processed meat niya. Okay? So, kung hindi naman 'yan processed meat na maganda lang 'yung packaging, naka-tetra pack or vacuum pack. Okay?
[6:40]Those will still fall under category ng original state. Okay? So, I hope maliwanag 'yung unang item sa Section 109A.
[6:48]Agricultural and marine food products in their original state. Sir, si Mama mahilig sa mga bulaklak, so, actually, meron siyang flower shop.
[7:03]That will not fall under this category kasi hindi naman food 'yung flowers. Okay? Ah, sir, logging business, logging, eh 'di kahoy 'yon.
[7:13]Hindi naman kinakain ang kahoy. So, pagdating sa mga logging, okay? Or mga logs. Okay?
[7:23]Sir, bumili kami ng kawayan o iba pa, tapos nilagay namin sa bahay pang-design sa kusina o kaya sa bathroom, etc.
[7:34]Hindi naman food items 'yung mga 'yon. So, those will be subject to VAT. Okay? I hope it's clear.
[7:40]The other item under this section, 109A, pertains to livestock and poultry of any kind.
[7:48]Livestock and poultry of any kind. Siyempre, 'pag sinabi mong livestock and poultry product, we are pertaining to animals intended for human consumption.
[8:02]So, tamang-tama sa ECQ, 'di ba? May mga nabalitaan tayo, may mga mayors daw or maybe barangay chairman na ang pinamimigay instead ng mga delata, noodles, ang pinamimigay ay rice at buhay na manok, 'di ba?
[8:18]So, 'yung manok will fall under livestock and poultry because that is an animal intended for human consumption. So, that will be exempt from VAT.
[8:27]Siyempre, 'yung binigay ni mayor, ni barangay chairman na rice. Ah, that will still fall under this agricultural food, original state.
[8:37]Okay? Pero 'yung manok, 'yan 'yung livestock and poultry. Okay?
[8:44]Eh, sir, paano kung kasi si mommy bumili ng baboy, biik? Pero actually, hindi niya 'yon kakatahin.
[8:53]Ang plano niya eh alagaan, palakihin, and then hopefully later, magka-anak at 'yun ang mga ipambebenta namin.
[9:01]Pasok pa rin siya sa livestock and poultry of any kind kasi kung basahin natin, livestock and poultry of any kind.
[9:09]Generally used as, or yielding or producing foods for human consumption and breeding stock and genetic materials therefore. Okay?
[9:24]So, that's your Section 109A. So, 'yung agricultural marine food original state, saka livestock and poultry of any kind.
[9:34]Obviously, the, maybe the reason why the law exempt this particular items, ay dahil basic necessity 'to, eh, pagkain ito, eh.
[9:47]Karamihan naman ng mga Pinoy, 'di ba? Medyo kapos sa buhay. So, kung pa-VAT iba naman 'yung unprocessed na agricultural marine food product, eh 'di lalo nang hindi magiging affordable sa masa, 'di ba?
[10:02]Kaya, probably, that's the reason why the law exempt this items. Okay?
[10:07]So, that's your very first item in the list of VAT exempt sales and transaction, so, I hope maliwanag.
[10:16]Let's proceed to the, uh, in this particular slide, before we proceed to the next VAT exemption, okay, or VAT exempt sale and transaction.
[10:27]You were given here the examples of agricultural and marine food products in their original state. So, pakibasa mo na lang 'yan.
[10:37]Pero, I would like you to take a look 'yung nasa bottom portion ng slide. May nakalagay diyan, note.
[10:45]Livestock or poultry does not include fighting cocks. Sir, saglit lang.
[10:53]Fighting cocks, 'di ba pwedeng kainin 'yon? Oo, pero hindi sa intended for human consumption.
[11:00]Kaya when you buy fighting cocks, okay? It's subject to VAT.
[11:04]Naalala ko mga few days ago or, ah, maybe last week, I'm not sure. Okay?
[11:13]Ah, merong isang mayor, 'di ba? Sa Valenzuela yata. Sa Valenzuela ba nangyari 'to na during ECQ, nahuli 'yung mga mananabong na nagsasabong, 'di ba?
[11:24]So, ano ginawa ni mayor? Pardon me kung hindi sa Valenzuela 'to ha. Illustration lang pero based sa news na napanood ko, nabasa ko.
[11:33]Ah, ang ginawa yata ay 'yung mga panabong kinuha ni mayor, tapos ipinaluto at pinakain. So, galit na galit 'yung mga mananabong. Okay?
[11:50]So, pwede namang kainin, sir. Yes, but generally, when you buy the fighting cock or when you buy fighting cocks, okay?
[11:59]You really don't intend to, uh, use it for human consumption. Panabong mo 'yon. So, pets siya, actually.
[12:06]So, when you buy fighting cocks, it's subject to VAT. So, halimbawa, Texas. 'Di ba? Sa amin kasi sa probinsya, when we say fighting cocks, normally, ang tawag namin 'yan, Texas.
[12:16]Okay? So, when you buy Texas na panabong, then that's subject to VAT. Paano, sir, 'yung aso? Bili ako ng aso sa mall.
[12:25]Oh, hindi naman 'yan intended for human consumption, unless siguro nasa China ka. Joke lang ha, sa mga Chinese. Joke lang, illustration.
[12:35]So, of course, that is not intended for human consumption. At saka huwag mong isama ang China dito dahil what we are discussing here are those items exempt under the tax code ng Pilipinas. Okay?
[12:50]So, exempt 'yung mga 'yon. Okay?
[12:58]So, I hope I made myself clear. So, I hope maliwanag si Section 109A.
[13:08]So, siyempre, kung medyo nakukulangan ka pa, anyway, in-advertise ko din naman 'yung mga ibang negosyo dito. 'Di i-advertise ko na din 'yung book ko.
[13:17]So, you may read my book. Sa mga hindi pa nakakaalam, meron akong libro sa taxation. So, kung may kulang sa mga diniskas ko, you, you will probably find it in my book. Okay?
[13:32]Next, second in the list of VAT exempt sales and transaction. Okay? It's Section 109B.
[13:42]Sale or importation of, so again, just like in the first list of VAT exempt sales and transaction.
[13:50]The exemption in VAT here is not pertaining only to the sale but also with respect to importation. So, balikan natin. Sale or importation of fertilizers.
[14:02]So, madali lang naman, 'di ba? Lahat ng fertilizers VAT exempt. When you sell it, when you import, it's exempt.
[14:09]Bakit kaya, sir? Ah, probably because this is related to agricultural food product. Original state, 'di ba?
[14:17]Para sa mga ano 'yan, generally, eh, mga veggies, 'di ba? So, kasi kung i-VAT mo 'yan, although in-exempt mo na 'yung agricultural food product or products, then dapat i-exempt mo na rin ang fertilizers. Okay?
[14:47]Next, ah, para lang ma-compare ko si fertilizer saka si feeds, 'no?
[14:53]Diretso muna ako kay feeds. As you can see in your second bulleted item, may nakalagay diyan, livestock and poultry feeds. Okay?
[15:04]So, dalawang klase ang feeds. We have livestock, poultry feeds, same lang 'yon. And the other one is specialty feeds.
[15:12]May clue ka naman, eh. 'Pag sinabing livestock, poultry, 'di ba kanina sa 109A, when we say livestock, poultry, we pertain to animals intended for human consumption.
[15:23]So, therefore, when you say livestock and poultry feeds, we are pertaining to feeds intended for livestock and poultry animals na intended for human consumption.
[16:01]'Pag 'yan, V-AT mo, magmamahal ang meat, 'di ba? Oh. Para hindi magmamahal ang meat, i-exempt mo din 'yan sa VAT.
[16:10]However, kung 'yung feeds na binebenta mo ay hindi intended for poultry animals, for livestock.
[16:21]Eh, sir, bumili ako ng feeds para sa aso ko. Ah, vatable 'yon kasi ang aso ay hindi naman intended for human consumption.
[16:30]So, 'yung feeds na pinakain mo do'n, subject din sa VAT 'yon. Feeds para sa pusa ko, sir, ganun din. Feeds para sa fighting cocks ko, sir, ganun din, vatable.
[16:41]Ang tawag sa mga feeds na 'yon, specialty feeds. Actually, simple lang naman, 'di ba? Oh. Fertilizer, exempt.
[16:49]Feeds. Ah, dapat ano, poultry and livestock feeds para exempt, otherwise, subject to VAT. And then, in addition to that, under this section, 109B.
[17:02]'Yung mga wala sa 109A. Seeds. Kasi ang nasa 109A, 'di ba? Agricultural food, marine food, tapos livestock and poultry animals na.
[17:15]Walang seeds do'n. So, sinama lang. Okay? Seeds, seedlings, fingerlings, fish, prawn.
[17:24]So, as you can see, all of those items are related also to food products, original state intended for human consumption.
[17:35]And then, pansinin mo, including ingredients, whether locally produced or imported. We're pertaining to the ingredients to be used in manufacturing the poultry feeds.
[17:49]Balikan mo si B-MEG. Sir, si B-MEG hindi lang 'yan ano, nagbebenta ng poultry feeds.
[17:54]Siya din mismo nagma-manufacture ng feeds niya for sale. So, kung tayo si B-MEG Corporation, of course, we will be buying ingredients sa pag-manufacture ng ating poultry feeds.
[18:09]So, dapat 'yung mga binibili natin na ingredients to manufacture the poultry feeds, will be exempt from VAT.
[18:18]Okay? Regardless kung 'yan ay binili mo dito sa Pilipinas or in-import mo. Kasi nga, ang coverage ng Section 109B is sale and importation.
[18:30]Okay? 'Yan. Whether locally produced or imported.
[18:37]Sir, si Pedro Corporation manufacturers ng specialty feeds. 'Di ba ang specialty feeds ay subject sa VAT? Yes, sir.
[18:47]So, paano 'yung, sir, 'pag bumili siya ng ingredients para mag-manufacture ng specialty feeds? Oh, vatable 'yon.
[18:55]Kasi ang exempt ay mga ingredients to be used to manufacture poultry or livestock feeds. Okay?
[19:06]I'll give you a simple guide do'n sa discussion natin. Eto 'yan.
[19:12]Pasensya na sa Powerpoint ko. Hindi ganun kabihasa si sir Tabag n'yo sa Powerpoint. Don't worry, after ECQ, I'll let some of my staff to, uh, prepare it for me para gumanda-ganda naman ng, ah, husto. Okay?
[19:29]So, 'yan. Kung fertilizers, lahat, exempt. Pero if that is feeds, S is sale, I is importation. So, if that is feeds, classify first the feeds.
[19:40]Is that poultry feeds? Is that specialty feeds? Kasi kung poultry feeds, VAT exempt. Specialty feeds, subject to VAT. 'Yan.
[19:52]Okay? So, I'll share to you a BIR ruling issued during 2014.
[20:00]So, BIR Ruling 044-2014, as you can see in your screen. The taxpayer here is a sole proprietor, but licensed by the Bureau of Animal Industry by the, uh,
[20:18]Department of Agriculture. Okay? So, a sole proprietorship, which has a license to operate from the Bureau of Animal Industry (BAI), is engaged in the importation of premix enzyme additives for livestock feeds.
[20:30]So, this is an ingredient, used in the production of feeds. 'Yun nga lang, anong klaseng feeds ba kasi ang prino-produce niya?
[20:43]According to the problem, it will be used as an additive for livestock feeds. Oh, livestock feeds, eh. Oh, 'di VAT exempt. Okay? VAT exempt.
[43:32]Okay? I hope maliwanag. Okay? So, I hope I was able to help you understand the seven, first seven, uh, VAT exempt sales and transactions. Okay? Under the tax code. So, again, thank you very much for watching.
