VAT Ruling No. 034-91

May 29, 1991 VAT RULING NO. 034-91 Datagraphics Incorporated Orense corner del Carmen St. Guadalupe, Makati Attention: Mr . Antonio M . Inocentes Vice President - Finance S i r s : This refers to your letter dated September 7, 1990 requesting confirmation whether the purchases of your customer, Nayong Pilipino Foundation, are exempt from VAT, on the basis of the grant of tax exemptions thereto under Presidential Decree No. 37. In reply, please be informed that Nayong Pilipino Foundation's claim for tax exemption has no legal basis. The exemption privilege of said Foundation from all forms of taxes under P.D. No. 37 has been repealed by Presidential Decree No. 1931 which withdrew all tax and duty exemption privileges granted to government-owned or controlled corporations. Moreover, even if such decree remains valid, it cannot be invoked by Nayong Pilipino Foundation for value-added tax (VAT) exemption of its purchases from Datagraphics Inc., inasmuch as the tax exemption privileges provided thereto are applicable only to direct taxes. VAT, being an indirect tax, may be passed on by Datagraphics to Nayong Pilipino Foundation who will shoulder the VAT as an additional cost to its total goods purchased. Such being the case, Nayong Pilipino Foundation is liable to the payment of all forms of taxes, including the 10% value-added tax. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue