BIR Ruling [DA-502-98]

November 18, 1998 BIR RULING [DA-502-98] Mrs. Rosalia T. Uy Rose Copra Buying Station Villanueva, Misamis Oriental M a d a m : This refers to your fax letter dated October 27, 1998 requesting for a cancellation of the tax assessment issued against you for allegedly being erroneous and the recovery of the taxes paid thereon. aisadc It is represented that you are engaged in the small-scale buying and selling of copra; that you were issued assessment notice dated November 26, 1996 bearing on your 1994 VAT delinquency for P121,421.07 inclusive of increments, on the sale of copra; that you sought a compromise of the said tax liability and paid an amount of P21,035.37; that, however, the Commissioner of Internal Revenue denied your said request for a compromise, thereby causing the Revenue District Officer of your district to reiterate the assessment through its letter dated July 15, 1998, giving you 15 days to settle your alleged tax liability; and that finally, you came across several BIR rulings stating that copra is exempt from VAT in all stages of distribution, hence this request. In reply, please be informed that in accordance with Revenue Memorandum Circular (RMC) 47-91, a copy of which is enclosed for your easy reference, the sale of copra by a trading company and a subsequent seller is subject to VAT pursuant to Section 9(b)(1) of Revenue Regulations 5-87. This is true for the period encompassing August 17, 1990 up to December 31, 1995. But beginning January 1, 1996, copra was expressly declared VAT-exempt pursuant to R.A. 7716, otherwise known as the Expanded Value-Added Tax Law. Accordingly, the tax assessment for delinquency VAT issued against you on your sales or trading activities on copra for the taxable year 1994 has legal basis. LLphil Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal & Enforcement Group