VAT Ruling No. 026-92

March 11, 1992 VAT RULING NO. 026-92 NIRC Sec. 102 (a) Precedent Ruling 007-91 Kasamne SMKB, Inc. 2nd Floor, LBP Bldg. Gen. Tinio cor. Gobaldon St., Cabanatuan City Attention: Mr. Benedicto R. Villanueva Chairman S i r : This refers to your letter dated May 18, 1991 addressed to the Honorable Agapito A. Aquino, Senator, which was endorsed to this Bureau for favorable consideration with regard to exemption from payment of the 10% value-added tax. Said tax is passed on to the Katipunan ng mga Samahang Magsisibuyas ng Nueva Ecija (KASAMNE) by the Food Terminal, Inc. (FTI) as an additional charge for storing the cooperative's onion produce. In reply; we regret to inform you that your request cannot be granted for lack of legal basis. The exemptions of cooperatives from taxes under Articles 61 and 62 of the Cooperative Code of the Philippines (R.A. 6938) is limited only to the taxes to which these cooperatives are directly liable. This being the case, the KASAMNE is liable to the payment of 10% VAT billed by FTI 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 cooperative's tax exemption privileges under R.A. 6938. Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue