VAT Ruling No. 004-93

February 2, 1993 VAT RULING NO. 004-93 Section 103 (u)-100 102 026-92 004-93 Cabanatuan La Suerte Primary Multi-Purpose Cooperatives, Inc. Syquio Plaza, Cabanatuan City 3100 Nueva Ecija Attention: Mr . Edward O . Joson Chairman Gentlemen : This has reference to your letter dated July 2, 1992 requesting for a ruling exempting your cooperative from the value-added tax (VAT) on its trading with non-members on locally manufactured goods considering the fact that Article 62(1) of Republic Act (RA) No. 6938 so provides and that the Cooperative Development Authority of Region III has correspondingly issued to you such a certification in accordance with said law. In reply, please informed that your cooperative shall be exempt from the payment of VAT for a period of ten years from date of registration with the Authority, on your sales to non-members provided that your accumulated reserves and undivided net savings are not more than Ten Million (P10,000,000) pesos, pursuant to Article 62 of RA No. 6938, otherwise known as the Cooperative Code of the Philippines. However, since the exemptions of cooperatives from taxes under RA No. 6938 are limited only to taxes to which they are directly liable, you are liable to pay the 10% VAT on your purchases of goods and/or services in accordance with Sections 100 and 102 respectively, of the Tax Code, since said tax is an indirect tax which can be passed on as part of the cost of the goods sold or services rendered, notwithstanding the cooperatives' tax exemption privileges under RA No. 6938. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue