VAT Ruling No. 035-91

May 29, 1991 VAT RULING NO. 035-91 Datagraphics Inc. Orense Cor. del Carmen St. Makati, Metro Manila Attention: Antonio M . Inocentes Vice-President Finance S i r s : This has reference to your letter dated October 26, 1990 requesting for confirmation of your opinion that the purchases of goods from your company by electric cooperative are subject to 10% VAT. In reply, please be informed that the exemption privileges of electric cooperatives withdrawn by E.O. No. 93 but restored by FIRB Resolution No. 24-87 is limited only to the taxes for which the electric cooperatives are directly liable. Since VAT is an indirect tax, it can be shifted to the purchasers and once shifted it forms part of the cost of the goods and services they purchase. The shifting of the VAT to the customers/clients does not make them directly liable therefor; hence, they cannot invoke their tax exemption privilege. Such being the case, the purchases made by the electric cooperatives are subject to 10% VAT pursuant to Section 100(a) of the Tax Code. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue