Applicability of VAT on Local Sales of Logs to Other Sawmill Operators

August 26, 1988 BIR RULING NO. 417-88 103 (a) 000-00 417-88 Gentlemen : This refers to your letter dated July 8, 1988 stating that you are a timber licensee/concessionaire and at the same time a sawmill operator; that some of the logs produced by you are sold to local sawmill operators while the rest are being sawn/processed into lumber in your own sawmill; and that some of your lumber are exported while the rest are sold locally. Based on the foregoing facts and considering that your sale of non-food agricultural, marine and forest products is not registered, you now request for a ruling on the applicability of VAT on your local sales of logs to other sawmill operators. In reply, please be informed that pursuant to Section 103(a) of the Tax Code, as amended by Executive Order No. 273, sale of non-food agricultural, marine and forest products in their original state by the primary producer is exempt from VAT. Such being the case, sale by you of logs to the local sawmill operators is exempt from VAT because, as a log concessionaire, you are the primary producer of logs. Your exemption from VAT is not affected by the fact that you are not a VAT registered taxpayer with respect to your activity covering sale of logs. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner