VAT Ruling No. 007-91

January 29, 1991 VAT RULING NO. 007-91 Food Terminal, Inc. South Superhighway Taguig, Metro Manila Attention: Mr . Jesus G . Aoyang Officer-in-Charge Accounting Dept . S i r s : This refers to your letter dated August 20, 1990 seeking an opinion on whether or not your client KASAMNE, a cooperative, is exempt from the imposition of value-added tax (VAT). Based on your letter, Food Terminal, Inc. (FTI), a government owned/controlled corporation engaged in estate leasing and storage services, charges its clients, including cooperatives handling agricultural products, an additional 10% value-added tax. Corollary to this, the cooperatives request that they be exempted from the 10% VAT based on the following grounds: 1) they are exempted on all forms of taxes and hence, could not use the VAT as tax credit and; 2) the VAT make their expenses higher, making the farmers get lower returns from their products. In reply thereto, please be informed that the exemptions of cooperatives from taxes under Art. 61 and 62 of the Cooperative Code of the Philippines (RA 6938) is limited only to the taxes for which these cooperatives are directly liable. This being the case, the cooperatives should pay the 10% VAT billed by FTI since said tax is an indirect tax which can be passed on as part of the cost of the services being rendered notwithstanding the cooperative's tax exemption privileges under RA 6938. LLjur Very truly yours, JOSE U. ONG Commissioner of Internal Revenue