VAT Ruling No. 040-94

February 8, 1994 VAT RULING NO. 040-94 Sec. 103 (b); 000 DEALCO, Incorporated VIB Compound, Vitas Street Tondo, Manila Attention: Mr. Dennis B. Alcoreza General Manager Gentlemen : This refers to your letter dated October 8, 1993 stating that you are a VAT registered corporation engaged in the livestock business; that you are presently importing cattle from Australia in addition to your local buying and maintaining feedlot operations for the breeding and fattening process at Bo. Sto. Rosario, Glamang, Polomolok, South Cotabato; and that the livestock are shipped to Manila on a regular basis for sale in their original form for food production. ASaTHc Based on the foregoing you now seek for a ruling exempting you from the value added tax which you will present to your service contractors and suppliers so that you will not be charged VAT on your purchases of goods and services in the same manner that you are not charging VAT to your buyer-customers. In reply, please be informed that while your livestock business including your cattle importation, is exempt from VAT pursuant to Section 103 (b) of the Tax Code, said exemption is limited only to your direct tax liability. Since VAT is an indirect tax, it can be passed-on to you as part of the cost of goods or services. Accordingly, your request for exemption from the 10% VAT passed-on to you by your service contractors and suppliers cannot be granted for lack of legal basis. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue