Export sale by a VAT-Registered Corporation Merely Exempt from Tax

December 28, 1993 BIR RULING NO. 539-93 EXPORT SALE BY A VAT-REGISTERED CORPORATION MERELY EXEMPT FROM TAX 100 (a) (1) 100 (v) 137-91 539-93 Don Gaspar Vicente, Inc. Bais City 6523 Negros Oriental Attention: Mr . Ignacio L . Vicente President This refers to your letter dated April 5, 1993 stating that you are a bonafide member of Batama Farmer's Cooperative Marketing Association, Inc., a cooperative duly registered with the Cooperative Development Authority (CDA) engaged primarily in the supply of production inputs and exclusive marketing of agricultural products of the farmer-members; that primarily, you are producing sugar cane/sugar as your agricultural product; that in every crop-year, the Cooperative collates the available production of the members, arranges for a bidding at the highest possible price and consummates the sale of the sugar and its by-products; that molasses, as a by-product, goes thru the same process for export abroad; that the Cooperative has been exporting the entire bulk of the molasses output, thru JULTRADE, Bacolod City, a local representative of the MITSUI & Co. (H.K.) Ltd., based in Hongkong; that upon acceptance of the bid price, the buyer provides the ship in which to load the molasses; that the Cooperative calls on the farmer-members to deliver their aliquot shares of the shipment directly to the ship, and the payment is made in U.S. dollars; that the Cooperative does not take possession nor does it acquire ownership of the molasses exported; that by way of service to its Members, in conformity with the marketing agreements and the special power of attorney, it merely acted as a channel thru which the molasses was exported. Based on the foregoing, you now request for a ruling as to whether or not your export sales of molasses to Mitsui & Co., (H.K.) Ltd., as a cooperative member is exempt from the payment of value added tax (VAT). In reply, please be informed that pursuant to Section 100(a)(1) of the Tax Code, as amended, export sales by a VAT registered person or entity shall be subject to zero percent (0%), otherwise it shall be merely exempt pursuant to Section 103(v) of the Tax Code, as amended. Since you are not a VAT registered person, your export sales of molasses to Mitsui & Co., (H.K.) Ltd. is merely exempt. cdtech LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue