Tax Exemption of Cooperatives is Limited Only to Taxes Directly Payable by Them, hence, They are Not Exempt from VAT

August 9, 1991 BIR RULING NO. 151-91 99 000-00 151-91 Gentlemen : This refers to your letter dated June 7, 1991 in effect requesting exemption from the payment of the value-added tax on your purchase of prime commodities from food manufacturers/suppliers on the ground that you are a cooperative duly registered with the Cooperative Development Authority (CDA), hence, exempt from all national, city, provincial, municipal or barangay taxes, including VAT. cdtech In reply, please be informed that your request cannot be granted for lack of legal basis. The exemption of cooperatives from taxes under Article 61 or 62 of the Cooperative Code (RA 6938) is limited only to taxes directly payable by them. The value-added tax is an indirect tax , payable by the seller and not by the purchaser of the goods. (Section 99, Tax Code, as amended) being an indirect tax, it can be added to the cost of goods purchased, not as tax but as additional cost which the purchaser has to pay to obtain the goods purchased. Hence, you cannot invoke your tax exemption privileges to avoid the passing on or shifting of the VAT to you by the manufacturers/suppliers of goods purchased by you. Very truly yours, (SGD.) JOSE U. ONG Commissioner