VAT Ruling No. 042-89

May 19, 1989 VAT RULING NO. 042-89 Pacific Cement Co., Inc. Prince Bldg., 117 Rada St. Legaspi Village, Makati Metro Manila Attention: Mr . Romeo B . Aspirin Corporate Controller S i r s : This has reference to your letter dated July 29, 1988 inquiring if coal is subject to the value-added tax (VAT). In reply, please be informed of the following: 1) The production or sale of coal by local coal operations which entered into operating contracts with the government is subject to 10% VAT pursuant to Section 100 (a) of the Tax Code, as amended. It is significant to note that by virtue of Executive Order No. 93 (effective March 10, 1987), the tax exemption privileges granted to local producers of coal under Presidential Decree No. 972 are withdrawn. 2) The sale of coal by any other primary producer or supplier is subject to the VAT under Sec. 100 of the Tax Code, as amended by Executive Order No. 273, if the annual gross sales of the producer/exporter exceed P200,000 during any 12 month period. Otherwise, if the gross sales do not exceed P200,000, the producer or supplier is exempt from VAT pursuant to Sc. 103(w) of the Tax Code but is subject to the 2% percentage tax on its gross sales under Sec. 112 of the same Code. However, if such exempt person optionally registered for VAT pursuant to Sec. 107(d) of the same Code, the 10% VAT will be imposed. Furthermore, in either case, coal is subject to excise tax at ten pesos (P10) per metric ton under Sec. 151 (1) of the same Code. aisadc Please be guided accordingly. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue