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Which chicken meat product is subject to VAT?
Which chicken meat product is subject to VAT?
The activity of the broiler company I manage consists of raising chickens, slaughtering them, and selling the products. During the cutting of chicken meat into portions, meat trimmings are processed into minced meat without adding any ingredients. This product is frozen, packaged, and sold. As is known, the sale of poultry meat is exempt from VAT. Is the sale of minced meat also exempt from VAT?
The State Tax Service under the Ministry of Economy has stated that, in accordance with Article 164.1.37 of the Tax Code, the sale of animal and poultry meat has been exempt from VAT for a period of seven years starting from January 1, 2020. However, the provisions of this article do not apply to animal and poultry meat that has undergone processing operations, except for slaughtering and freezing.
At the same time, the classification of goods and services in the country is regulated by the “Classification of Product Types” approved by Decision No. 9/2 of the Board of the State Statistical Committee of the Republic of Azerbaijan dated October 31, 2018. In this classification, “meat and preserved meat products,” “processed and preserved poultry meat,” and “meat products and products obtained from poultry meat” are defined as products of the manufacturing industry under Section “C”.
Based on the above, since chicken mince is considered a product that has undergone processing operations, the sale of such a product is subject to VAT at the standard rate of 18 percent.
The above-mentioned provisions are regulated by Article 164 of the Tax Code and the Decision No. 9/2 of the Board of the State Statistical Committee of the Republic of Azerbaijan dated October 31, 2018.
The activity of the broiler company I manage consists of raising chickens, slaughtering them, and selling the products. During the cutting of chicken meat into portions, meat trimmings are processed into minced meat without adding any ingredients. This product is frozen, packaged, and sold. As is known, the sale of poultry meat is exempt from VAT. Is the sale of minced meat also exempt from VAT?
The State Tax Service under the Ministry of Economy has stated that, in accordance with Article 164.1.37 of the Tax Code, the sale of animal and poultry meat has been exempt from VAT for a period of seven years starting from January 1, 2020. However, the provisions of this article do not apply to animal and poultry meat that has undergone processing operations, except for slaughtering and freezing.
At the same time, the classification of goods and services in the country is regulated by the “Classification of Product Types” approved by Decision No. 9/2 of the Board of the State Statistical Committee of the Republic of Azerbaijan dated October 31, 2018. In this classification, “meat and preserved meat products,” “processed and preserved poultry meat,” and “meat products and products obtained from poultry meat” are defined as products of the manufacturing industry under Section “C”.
Based on the above, since chicken mince is considered a product that has undergone processing operations, the sale of such a product is subject to VAT at the standard rate of 18 percent.
The above-mentioned provisions are regulated by Article 164 of the Tax Code and the Decision No. 9/2 of the Board of the State Statistical Committee of the Republic of Azerbaijan dated October 31, 2018.