Are Fertilizers, Seeds, and Animal Feeds VAT-Exempt? NIRC Section 109(B) Explained

Fertilizers, seeds, seedlings, fingerlings, and the ingredients used to manufacture livestock, poultry, fish, and prawn feeds are exempt from 12% VAT under NIRC Section 109(B) — a separate provision from the Section 109(A) exemption for finished agricultural food products. The exemption covers farming inputs, not just farm output, but it carves out one category: specialty feeds formulated for race horses, fighting cocks, aquarium fish, zoo animals, and household pets, which stay fully VATable.

What exactly does Section 109(B) exempt? #

Section 109(B) exempts the sale or importation of fertilizers, seeds, seedlings and fingerlings, and fish, prawn, livestock, and poultry feeds — including the ingredients used to manufacture finished feeds — regardless of whether they are locally produced or imported. This is a distinct line item from Section 109(A), which covers finished agricultural and marine food products sold in their original state. Section 109(B) instead exempts what a farmer, hog raiser, poultry grower, or fish/prawn farmer buys to produce that food — treating farming inputs as deserving the same VAT-free treatment as the food itself, on the theory that taxing inputs would just push the cost downstream into consumer food prices. The statutory language reads:

“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 (except specialty feeds for race horses, fighting cocks, aquarium fish, zoo animals and other animals generally considered as pets).”

Revenue Memorandum Circular No. 55-2014 later clarified the treatment of livestock and poultry feed ingredients specifically, confirming that ingredients used in manufacturing finished feeds for food-producing animals fall within the exemption under Section 4.109-1(B)(1)(b) of Revenue Regulations No. 16-2005 — the implementing regulations for this exemption. This is relevant to feed millers who buy raw ingredients (corn, soybean meal, fish meal, vitamin premixes) rather than finished feed, since the exemption follows the ingredient through to the finished feed rather than applying only to the retail feed bag.

Where does the specialty-feed carve-out draw the line? #

The exemption only covers feed for animals raised as a food source — livestock, poultry, fish, and prawn — and expressly excludes “specialty feeds” formulated for race horses, fighting cocks, aquarium fish, zoo animals, and animals generally considered pets, which remain subject to 12% VAT. The practical test isn’t the species alone but the animal’s purpose: chicken feed for a commercial broiler operation is exempt because the chicken is raised for food, while feed marketed for a household pet chicken, an aquarium fish, or a racehorse is VATable because the animal isn’t being raised as a food source. A feed manufacturer or pet store selling both product lines needs to track them separately for VAT purposes rather than treating the whole feed category as one exempt line.

How does this fit with the exemption for finished food products? #

Section 109(A) and Section 109(B) work together across the same supply chain — inputs are exempt going in, and the finished agricultural food product is exempt coming out, but anything manufactured or processed in between is a separate question. A rice farmer’s fertilizer and seed purchases are exempt under Section 109(B); the farmer’s sale of palay is exempt under Section 109(A) as an agricultural food product in its original state. But once palay is milled into flour-grade products or otherwise industrially processed beyond simple preparation, that output can lose the Section 109(A) exemption even though the inputs that grew it stayed exempt throughout. For the finished-product side of this distinction, see Is Selling Rice, Fish, or Vegetables VAT-Exempt? Agricultural and Marine Food Products Under NIRC Section 109(A), and for the full list of Section 109 categories, see VAT-Exempt Transactions Under NIRC Section 109.

Worked example: an agri-supply store’s mixed inventory #

A farm supply store in a rice-growing municipality sells four product lines in a typical month:

The store’s exempt sales — fertilizer, seed, and broiler feed, totaling ₱800,000 — are excluded from output VAT and from the ₱3,000,000 VAT-registration threshold computation for that portion of the business. Only the ₱60,000/month in pet and aquarium feed (₱720,000/year) is a VATable line. If the store’s VATable sales stay below the VAT-registration threshold, it may remain non-VAT registered and instead subject to the general percentage tax under BIR Form 2551Q on that VATable portion alone, while continuing to sell fertilizer, seed, and food-animal feed VAT-free regardless of volume.

Frequently asked questions #

Are fertilizers VAT-exempt in the Philippines? #

Yes. NIRC Section 109(B) exempts the sale or importation of fertilizers from the 12% value-added tax, whether the fertilizer is locally produced or imported, with no separate volume or buyer-type test.

Are livestock and poultry feeds VAT-exempt? #

Yes, for feeds intended for food-producing animals. Section 109(B) exempts fish, prawn, livestock, and poultry feeds, including the ingredients used to manufacture finished feeds. It specifically excludes “specialty feeds” for race horses, fighting cocks, aquarium fish, zoo animals, and other animals generally considered pets, which remain VATable.

Is dog food or aquarium fish food VAT-exempt under this provision? #

No. Section 109(B) expressly carves out specialty feeds for animals generally considered pets — including aquarium fish and, by the same logic, dogs and cats — from the exemption. Feed manufactured for pet consumption is a VATable sale even though feed for the same species used in food production could qualify.

How is Section 109(B) different from the exemption for agricultural food products? #

Section 109(A) exempts finished agricultural and marine food products in their original state — the output a farmer or fisherman sells. Section 109(B) exempts a different category: the farming inputs used to produce that output, such as fertilizer, seed, and feed. A rice farmer’s fertilizer purchase and a rice miller’s palay sale sit under two different exemption provisions.

Do feed ingredient suppliers need to prove the buyer will use the ingredients for finished feed? #

The exemption is written around the nature of the ingredient and its use in manufacturing finished feeds for food-producing animals, so a supplier selling feed-grade ingredients into that supply chain generally relies on the product’s classification rather than tracking each buyer’s end use — though keeping documentation of the intended use is good practice if a transaction is ever questioned on audit.

Summary #

NIRC Section 109(B) exempts fertilizers, seeds, seedlings, fingerlings, and food-animal feeds (plus their manufacturing ingredients) from VAT, on top of and separate from the Section 109(A) exemption for finished agricultural food products. The one meaningful carve-out is specialty feed for race horses, fighting cocks, aquarium fish, and pets, which stays VATable because those animals aren’t raised as a food source. An agri-supply business selling both farm inputs and pet products needs to split its sales by category rather than applying one blanket VAT treatment to its whole inventory. See VAT-Exempt Transactions Under NIRC Section 109 for how this input-side exemption fits alongside the output-side exemption for finished food products.