BIR Form 2307 for Feed Mills: Does the Agricultural Products Withholding Exemption Still Apply?

A feed mill sells manufactured animal feed — pelletized or mash formulations compounded from corn, soybean meal, fish meal, and additives — and that processed product falls outside Revenue Regulations (RR) No. 11-2018’s exemption for agricultural products in their original state. A buyer specifically designated a Top Withholding Agent (TWA) therefore withholds the standard 1% creditable withholding tax on feed purchases, the same way it would on any other manufactured good, rather than treating the purchase as exempt simply because feed is agriculture-adjacent.

This guide is part of the BIR Form 2307 series. It applies the same original-state test already covered in Do You Withhold Tax When Buying Agricultural, Marine, or Forest Products? The Top Withholding Agent Exemption and the TWA goods framework in BIR Form 2307 for Purchases of Goods: Top Withholding Agent 1% Rate Explained to a specific, frequently confused product: commercial animal feed.

Why doesn’t the agricultural exemption cover manufactured feed? #

RR No. 11-2018’s carve-out from the TWA 1% goods rule protects agricultural, forest, and marine products “in their original state” — and commercial animal feed has already left that original state by the time it reaches a buyer. A feed mill takes corn, soybean meal, rice bran, fish meal, vitamins, minerals, and binders and compounds them into a manufactured formulation, typically extruded or pressed into pellets or blended into mash to a specific nutritional profile. That manufacturing step is exactly the kind of processing the exemption’s original-state test is designed to exclude — the same logic this series applies to milled rice, canned fish, and cured meat, none of which keep the exemption their raw inputs once had.

“The term ‘agricultural suppliers’ refers to suppliers/sellers of agricultural, forest and marine food and non-food products, livestock and poultry of a kind generally used as, or yielding or producing of foods for human consumption; and breeding stock and genetic materials therefor.”

— Item (N), Section 2.57.2 of RR No. 2-98, as amended by RR No. 11-2018 (as restated in secondary tax commentary; the quoted text is a secondary-source restatement of the provision, not independently re-verified against the BIR’s own PDF of RR No. 11-2018 — confirm current wording before relying on it for a formal filing position)

Animal feed is a manufactured input used to raise livestock and poultry — it is not itself the livestock, poultry, or raw agricultural product the exemption describes. The distinction matters because a hog or poultry integrator buying feed is buying a factory-formulated product, not raw grain or unprocessed produce.

Who withholds, and at what rate, on a feed purchase? #

As with every other goods purchase in this series, withholding on a feed purchase applies only when the buyer has been specifically designated a BIR Top Withholding Agent — ordinary hog raisers, backyard poultry growers, and most small-to-mid-sized livestock operations withhold nothing at all. A large poultry integrator or hog producer that has received a TWA designation letter from the BIR, however, withholds 1% creditable withholding tax on its feed purchases once the feed mill becomes a regular supplier (six or more transactions in a year) or a single purchase reaches ₱10,000, under the same regular-supplier framework covered in The ‘Regular Supplier’ Rule for BIR Form 2307.

Worked example: an integrator buying feed from a mill #

GrowFast Poultry Integrators Inc., a BIR-designated Top Withholding Agent, buys ₱1,200,000 of compounded broiler feed in pellet form from Luzon AgriFeeds Corp., a feed mill organized as a corporation, during the quarter.

GrowFast issues BIR Form 2307 to Luzon AgriFeeds for the ₱12,000 withheld, remits it through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, and lists Luzon AgriFeeds in its Quarterly Alphalist of Payees (QAP). Had GrowFast instead bought the same volume of raw, unmilled corn directly from a cooperative of corn farmers to mill into its own feed in-house, that separate purchase of corn in its original state would fall within the RR No. 11-2018 exemption and GrowFast would withhold nothing on it — illustrating that the exemption tracks the product actually purchased, not the buyer’s industry.

Note: this withholding analysis is independent of whether the feed sale itself is VAT-exempt as an agricultural input under NIRC Section 109(B) — see VAT Exemption for Agricultural Inputs: Fertilizers, Seeds, and Feeds Under Section 109(B) for that separate rule, which uses similar “agricultural” language but operates under a different Tax Code provision than the TWA withholding exemption covered here.

Frequently asked questions #

Is animal feed from a feed mill exempt from Top Withholding Agent withholding the same way raw palay or fresh produce is? #

No. The RR No. 11-2018 exemption for agricultural, forest, and marine products applies only to goods in their original, unprocessed state. Manufactured animal feed — compounded from corn, soybean meal, fish meal, vitamins, and additives into pellets or mash — is a processed, manufactured product, not an agricultural product in its original state, so the exemption does not extend to it.

Who withholds on a purchase of animal feed from a feed mill? #

Only a buyer specifically designated a BIR Top Withholding Agent (TWA) withholds on a feed purchase, and only at 1% under ATC WC158 (corporate feed mill) or WI158 (individual feed mill operator). A hog or poultry raiser who hasn’t received a TWA designation letter generally withholds nothing on its feed purchases, regardless of the amount.

Does it matter whether the feed mill sells to a farm directly or through a distributor? #

No — the withholding analysis turns on the buyer’s TWA status and the nature of the product (processed feed vs. raw agricultural input), not on whether the sale runs through a distributor. A distributor reselling the same manufactured feed is still selling a processed good, so a TWA buying from the distributor withholds the same way it would buying directly from the mill.

What about the raw corn or soybean the feed mill itself buys to make the feed? #

That is a separate transaction analyzed on its own terms. If the feed mill buys raw, unmilled corn or soybean directly from farmers in original state, that purchase can fall within the RR No. 11-2018 agricultural exemption on the feed mill’s side as a buyer — but it has no bearing on how the feed mill’s own finished, manufactured feed is treated when the mill sells it onward.

Summary #

Manufactured animal feed is a processed product, not an agricultural product in its original state, so RR No. 11-2018’s TWA exemption for raw agricultural goods does not cover it — a designated Top Withholding Agent buying feed withholds the standard 1% (ATC WC158/WI158) once the regular-supplier or ₱10,000 single-purchase threshold is met. See Do You Withhold Tax When Buying Agricultural, Marine, or Forest Products? for where the exemption does apply, and BIR Form 2307 for Purchases of Goods for the base TWA goods rule.