VAT Ruling No. 004-89

January 23, 1989 VAT RULING NO. 004-89 L. C. Diaz and Co. 2nd Floor, Union-LDC & Co. Bldg. A. Bonifacio Drive, Port Area Manila S i r s : This refers to your letter dated October 18, 1988 stating that your client Unimer Export Corporation is engaged in the purchase and sale of agricultural products both for local and foreign markets. It is further represented that when your client applied for VAT registration it failed to indicate in the application form filed last October 29, 1987 the mandatory VAT activity since the transaction involving the production and sale of coconut oil has to start only on January 1, 1988; and that it was issued VAT Registration No. 32-A -001231 in spite of the fact that it only indicated the exempt activity of selling agricultural food products (mango and okra) for information purpose and not for optional registration purposes. cdtech Based on the foregoing, you now opine that the application filed by your client as well as the issuance of a certificate of registration has no valid basis; hence you now request for a cancellation of the same. In reply, please be informed that on the basis of the representations made through the application form, please be informed of the following: 1. Your client's activity of selling of agricultural products both domestically and abroad is subject to 10% and 0% VAT respectively from the effectivity date of its VAT registration. However, on the basis of the information indicated in the application form, the registration of its sale of agriculture products is cancelled effective January 1, 1989 subsequent to your request dated October 18, 1988. Hence, starting January 1, 1989, such sale is exempt from VAT and any balance of the input tax credits outstanding as of December 31, 1988 attributable or allocable to the sale of agricultural products should be credited against the expense account, i.e., purchases, or cost of sales or inventory account whichever is applicable, for 1989. 2. Since your client's activity of producing and selling of coconut oil has started on January 1, 1988 its certificate of registration can be amended to indicate that it is VAT registered for its business of producing and selling coconut oil provided that it has filed its quarterly VAT return of its sale from January 1 to the end of the fourth quarter ending in December 31, 1988. Your Client is hereby requested that all unused VAT invoices shall not be issued for its sale of agricultural products but only for its sale of coconut oil. LLcd Very truly yours, EUFRACIO. D. SANTOS Deputy Commissioner