Tax Imposed on the Purchase of Locally-Manufactured Cigarettes from the Factory, Wholesalers, Jobbers or Distributors

August 9, 1988 BIR RULING NO. 378-88 100 (1) 000-00 378-88 Gentlemen : This refers to your letter dated June 13, 1988 requesting clarification whether on your purchase of locally-manufactured cigarettes from the factory, wholesalers, jobbers or distributors, which are intended for export, you are exempt from the payment of value-added tax. In reply, please be informed that pursuant to Section 99 of the Tax Code, as amended, the value-added tax is payable by the seller, not the purchaser of the goods. Thus, in your purchase of locally-manufactured cigarettes the party subject thereto is the seller, e.g., factory, wholesalers, jobbers or distributors, as the case may be. When added to the cost of your purchases, it is no longer a tax payable by you but an additional cost which you have to pay to obtain the cigarettes. If you are not VAT-registered and you export said cigarettes you are exempt from the value-added tax; but if you are VAT-registered, you are zero-rated on your export thereof pursuant to Section 103(v) and 100(1) of the Tax Code, as amended by Executive Order No. 273. In the latter case, you can claim a refund or tax credit of the VAT-element added to the cost of cigarettes which are exported. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner