Taxability of a Business Involving Buying of Used Bunker Oil

March 9, 1989 BIR RULING NO. 036-89 103 (u) 000-00 036-89 S i r : This refers to your letter dated February 27, 1989 requesting a ruling on the taxability of your business involving buying of used bunker oil from various sources and selling the same without alteration to customers who use the same for wood treatment, rust proofing or as pesticides. cdtech In reply, please be informed that based on the foregoing facts, you are in the business of buying and selling goods. As such, you are subject to the 10% VAT if your gross sales during the 12-month period exceeds P200,000.00; otherwise, if your gross sales does not exceed P200,000.00, you are only subject to the 2% percentage tax pursuant to Section 9(b)18) of Revenue Regulations No. 5-87, implementing Sections 103(w) and 112 of the Tax Code, as amended by Executive Order No. 273. In the latter case, you may opt to register as a VAT taxpayer pursuant to Section 107(d) of the same Code, in which case, you shall be subject to the 10% VAT even if your gross sales does not exceed P200,000.00 for the 12-month period. [Sec. 18(c) Revenue Regulations No. 5-87] If you do not opt to register as such, you are required to register as a non-VAT taxpayer for monitoring purposes pursuant to Revenue Regulations No. 6-89. Further, since used bunker fuel is without generating capacity, it is no longer subject to excise tax under Section 145(b)(3) of the same Code, which prescribes a 0% ad valorem tax only on bunker fuel oil or similar fuel oils with the required generating capacity. cd Very truly yours, (SGD.) JOSE U. ONG Commissioner