SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
Second Regnla!' Session 
) 
'\4 
DEC 17 P5:03 
SENATE 
S.B.NO,~522 
F' 
;·:1\ ;'11 ~'" .. ···-6-
Introduced by Senator Maria Lourdes Nancy S. Binay 
AN ACT EXPANDING AGRICULTURAL EXEMPTIONS TO THE EXPANDED VALUE 
ADDED TAX UNDER SECTION 109 OF THE NATIONAL INTERNAL REVENUE 
CODE 
EXPLANATORY NOTE 
The Expanded Value Added Tax system was imposed to improve revenue generation of the 
government for much needed projects. Considering that its effects are across the board. i.e., 
does not consider the disparity in the individual incomes of the purchaser, Congress saw it fit 
to identify exemptions under the system. 
One of the exemptions involved agricultural products. However, it appears that Congress left 
a crucial aspect of agriculture in the exemptions, that is the sale or purchase of much needed 
agricultural and fisheries equipment, which are much needed to improve agriculture in the 
country. and crucial to the goal of sufiiciency of food production. 
Considering that many of our farmers and our fishermen belong to the poorest sectors in 
society and the inability of government to provide direct subsidies, it is the opinion of this 
humble represcntation that appropriate tax reliefs should at least he given. 
For the above reasons, the passage of this bill is earnestly requested. 
Senator 


SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
Secoud Regular Session 
) 
'14 
GEC 17 P5 :04 
SENAT~522 
S.B.NO, 
_____ ItUEI\ LP ill'; . . f'-
Intl'oduced by Senator Maria LouI'des Nancy S. Binay 
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AN ACT EXPANDING AGRICULTURAL EXEMPTIONS TO THE EXPANDED VALUE 
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ADDED TAX UNDER SECTION 109 OF THE NATIONAL INTERNAL REVENUE 
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CODE 
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Be it enacted by the Senale and House 0/ Representatives of the Philippines in Congress 
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assembled: 
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SECTION I. Section 109 of the National Internal Revenue Code is hereby amended to read 
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as follows: 
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SEC. 109. E'Cempt Transactions. - The following shall be exempt Ji'om the value-added 
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tax: 
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(a) Sale of nonfood agricultural products; marine ,md forest products in their original 
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state by the primary producer or the owner of the land where the same arc produced; 
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(b) Sale of collon seeds in their original state; and copra; 
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(c) Sale or importation of agricultural and marine food products in their original state, 
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livestock and poultry of or king generally used as, or yielding or producing foods for 
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human consumption; and breeding stock and genetic materials therefor. Products 
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classified under this paragraph and paragraph (a) shall be considered in their original 
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state even if they have undergone the simple processes of preparation or preservation 
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for the market, .such as freezing, drying, salting, broiling, roasting, smoking or 
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stripping. Polished and/or husked rice, corn grits, raw cane sugar and molasses, and 
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ordinary salt shall be considered in their original state; 
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(d) Sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn, 
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livestock and poultry feeds, including ingredients, whether locally produced or 
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imported, used in the manufacture of finished feeds (except specialty feeds for race 
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horses, fighting cocks, aquarium fish, zoo animals and other animals generally 
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considered as pets); 
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(e) Sale or importation of coal and natural gas, in whatever form or state, and 
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petroIeunl products (except lubricating oil, processed gas, grease, wax and petrolatum) 
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subject to excise tax imposed under Title VI; 
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(f) Sale or importation of raw materials to be used by the buyer or importer himself in 
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the manuracture or petroleum products sui:lject to excise tax, except lubricating oil, 
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processed gas, grease, wax and petrolatum; 
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(g) Importation of passenger and/or cargo vessels of more than five thousand tons 
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(5,000) whether coastwise or ocean-going, including engine and spare parts of said 
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vessel to be used by the importer himself as operator thereof; 
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(h) Importation of personal and household effects belonging to the residents of the 
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Philippines returning from abroad and nonresident citizens coming to resettle in the 
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Philippines: Provided, That such goods are exempt from customs duties under the 
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Tariff and Customs Code of the Philippines; 
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(i) Importation of professional instruments and implements, wearing apparel, domcstic 
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animals, and personal household effects (except any vehicle, vessel, aircran, machinery 
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other goods for use in the manufacture and merchandise of any kind in commercial 
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quantity) belonging to persons coming to settle in the Philippines, for their own use and 
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not for sale, barter or exchange, accompanying such persons, or arriving within ninety 
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(90) days before or after their arrival, upon the production of evidence satisfactory to 
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the Commissioner, that such persons are actually coming to settle in the Philippines 
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and that the change of residence is bona fide; 
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(j) Services subject to percentage tax under Title V; 
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(k) Services by agricultural contract growers and milling for others of palay into rice, 
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corn into grits and sugar eane into raw sugar; 
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(1) Medical, dental, hospital and veterinary services subject to the provisions of Section 
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17 of Republic Act No. 7716, as amended; 
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(m) Educational services rendered by private educational institutions, duly accredited 
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by the Department of Education, Culture and Sports (DECS) and the Commission on 
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Higher Education (CHED), and those rendered by government educational institutions; 
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(n) Sale by the artist himself of his works of art, literary works, musical compositions 
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and similar creations, or his services performed for the production of such works; 
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(0) Services rendered by individuals pursuant to an employer-employee relationship; 
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(p) Services rendered by regional or area headquarters established in the Philippines by 
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multinational corporations which act as supervisory, communications and coordinating 
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centers for their affiliates, subsidiaries or branches in the Asia-Pacific Region and do 
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not earn or derive income from the Philippines; 
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(q) Transactions which are exempt under international agreements to which the_ 
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Philippines is a signatory or under special laws, except those under Presidential Decree 
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Nos. 66, 529 and \ 590; 
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(1') 
Sales by agricultural cooperatives duly registered with the Cooperative 
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Development Authority to their members as well as sale of their produce, whether in its 


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original state or processed form, to non-members; their importation of direct [arm 
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inputs, machineries and equipment, including spare parts thereof, to be used directly 
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and exclusively in the production and/or processing oUheir produce; 
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(s) Sales by electric cooperatives duly registered with thc Cooperative Development 
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authority or National Electrification Administration, relative to the generation and 
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distribution of electricity as well as their importation or machineries and equipment, 
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including spare parts, which shall be directly used in the generation and distribution of 
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electricity; 
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(t) Gross receipts from lending activities by credit or multi-purpose cooperatives duly 
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registered with the Cooperative Development Authority whose lending operation is 
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limited to their members; 
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(u) Sales by non-agricultural, non- clcctric and non-credit cooperatives duly registered 
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with the Cooperative Development Authority: Provided, That the share capital 
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contribution of each member does not exceed Fifteen thousand pesos (PI5,000) and 
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regardless of the aggregate capital and net surplus ratably distributed among the 
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members; 
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(v) Export sales by persons who are not V AT-registered; 
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(w) Sale of real properties not primarily held for sale to customers or held for Icase in 
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the ordinary course of trade or business or real property utilized for low-cost and 
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socialized housing as defined by Republic Act No, 7279, otherwise known as the 
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Urban Development and Housing Act of 1992, and other related laws, house and lot 
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and other residential dwellings valucd at One million pesos (P 1 ,000,000) and 
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below: Provided, That not later than January 31 st of the calendar year subsequent to the 
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effectivity of this Act and each calendar year thereafter, the amount of One million 
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pesos (Pl,OOO,OOO) shall be adjusted to its present value using the Consumer Price 
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Index, as published by the national Statistics Office (NSO); 
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(x) Lease or a residential unit with a monthly rental not exceeding Eight thousand 
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pesos (P8,000); Provided, That not later than January 31st of the calendar year 
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subsequent to the e±Iectivity of Republic Act No, 824 I and each calendar year 
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therealler, the amount of Eight thousand pesos (P8,000) shall be adj usted to its present 
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value using the Consumer Price Index as published by the National Statistics OlTicc 
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(NSO); 
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(y) Sale, importation, printing or publication of books and any newspaper, magazine 
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review or bulletin which appears at regular intervals with fixed prices for subscription 
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and sale and which is not devoted principally to the publication of paid advertisements; 
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[and] 
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(z) Sale or lease of goods or properties or the performance of services other than the 
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transactions mentioned in the preceding paragraphs, the gross annual sales and/or 
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receipts do n6t exceed the amount of Five hundred fifty thousand pesos 
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(P550,000): ProVided, That not later than January 31st of the calendar year subsequent 
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to the effectivity of RepUblic Act No, 8241 and each calendar year thereafter, the 
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amount of Five hundredliily thousand pesos (550,000) shall be adjusted to its present 


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value using the Consumer Price Index, as published by the National Statistics Office 
(NSO)[.l; AND 
(aa.) IMPORTATION AND SALE OF AGRICULTURAL/FARMING EQUIPMENT 
SUCH AS BUT NOT LIMITED TO TRACTORS, CULTIPACKER, ROTATOR, 
SUBSOILER, 
ROLLER, 
MECHANICAL 
CULTlV ATORS, 
FERTILIZER 
SPREADER, TERRAGA TOR, MANURE SPREADER, SPRAYER, SLURRY 
AGITATOR INCLUDING FlSHING EQUIPMENT AND BOATS USED FOR 
SUBSISTENCE FISHING. 
The foregoing exemptions to the contrary notwithstanding, any person whose sale of . 
goods or properties or services which are otherwise not subject to V A T, but who issues 
a VAT invoice or receipt therefor shall, in addition to his liability to other applicable 
percentage tax, if any, be liable to the tax imposed in Section 106 or 108 without the 
benefit of input tax credit, and such tax shall also be recognized as input tax credit to 
the purchaser under Section 110, all of this Code. 
SECTION 2. Repealing Clause. All laws, decrees, executive orders, proclamations, rules 
and regulations, and other issuances, or parts thereof inconsistent with the provisions and 
intent ofthis Act are hereby repealed or modified accordingly. 
SECTION 3. Separability Clause. If, for any reason, any section or provision of this Act is 
held unconstitutional or invalid, the other sections or provisions hereof shall not be affected 
thereby. 
SECTION 4. Effectivity. This Act shall take effect fifteen (15) days after its complete 
publication in alleast two (2) newspapers of general circulation. 
Approved,