BIR Ruling [DA-104-98]

March 26, 1998 BIR RULING [DA-104-98] PNOC Coal Corporation PNOC Energy Companies Bldg. Merritt Road, Fort Bonifacio 1200 Makati City Attention: Mr . Alfredo C . Troncales General Manager Gentlemen : This refers to your letter dated April 1, 1997 requesting for exemption from payment of the 10% VAT being passed on to you by the truck haulers on your contract for services with the latter. cdtech It appears that PNOC Coal Corporation is engaged in the importation and sale of coal; that you have engaged the services of third party truck haulers to transport the coal from the terminal stockpiles to the users, mostly cement plants; and that the truck haulers are charging you the input VAT but you cannot claim an output VAT; hence, this request to include in the coverage of the exemption the VAT on the transportation of coal. In reply, please be informed that your request cannot be granted for lack of legal basis. It is clear that the exemption from VAT of PNOC Coal Corporation covers only its importation and sale of coal, pursuant to Section 109 (e) of the Tax Code of 1997 but does not include the 10% VAT under Section 108(A) thereof, which is the direct liability of the truck haulers. However, since VAT is an indirect tax, the same may be passed on or shifted to the buyer of goods/services pursuant to Section 105 of the same Code. Once shifted, it is no longer a tax but an additional cost which becomes part of the contract price to be paid by the PNOC Coal Corporation. (BIR Ruling No. 132-96 dated November 27, 1996) Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)