BIR Ruling [UN-134-94]

March 22, 1994 BIR RULING [UN-134-94] L & E Multi-Purpose Cooperative P. Burgos Street, Cavite City Attention: Mr . Dominador E . Levardo General Manager Gentlemen : This refers to your letter dated February 3, 1994, requesting confirmation of your opinion that cooperatives are exempt from the 10% input VAT being imposed by VAT-registered suppliers on their (cooperatives) local purchase of goods. In reply, please be informed that this Office cannot confirm your opinion for lack of legal basis. Numerous rulings have been issued by this Office to the effect that the exemption of cooperatives from taxes under Articles 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. (BIR Ruling No. 151-91; VAT Ruling Nos. 007-91 and 015-93) cd Very truly yours, ALICIA P. CLEMENO Officer-in-Charge (Legal Service)