VAT Ruling No. 032-91

May 29, 1991 VAT RULING NO. 032-91 Blossomer Plastic Corp. E. Rodriguez Avenue Libis, Quezon City Attention: Ma . Milagros F . Padernal Controller S i r s : This has reference to your letter dated October 19, 1990 requesting clarification whether your transactions with your customers registered under the Kalakalan 20, as well as those registered as foundations/charitable institutions are exempted from VAT. In reply, please be informed that the grant of exemption privilege to your customers as mentioned above is limited only to taxes for which they are directly liable. Since VAT is an indirect tax it can be passed on to them and once shifted, it forms part of the cost of goods that they purchase. The shifting of the 10% VAT to your purchasers does not make them directly liable for the payment of the VAT; hence, they cannot invoke the exemption privilege granted to them to avoid the passed-on VAT. Such being the case, your sale of goods to these customers is subject to the 10% VAT under Section 100(a) of the Tax Code as amended. aisadc Very truly yours, JOSE U. ONG Commissioner of Internal Revenue