VAT Ruling No. 049-88

March 2, 1988 VAT RULING NO. 049-88 108-000-00-049-88 Merlo Agricultural Corporation 5828 Morada Avenue Lipa City Attention: Mr . Alfonso M . Cron Manager Veterinary Division Dear Sir : This has references to your letter dated February 16, 1988 requesting that you be enlightened as to whether the action of Philippine Chemical Laboratories, of increasing the price due to the 10% value added tax is legal. In reply thereto, please be informed that the billing of the 10% VAT on DR No. 31660 & 31661 which you attached is perfectly legal. There should be no increase in prices because had you purchased these items in 1987 the manufactured would have added additional tax of 10% instead of the 10% VAT. Both the sales tax and the value-added tax are indirect taxes which may be passed on to the buyer either as a separate item in the invoice or included in the total invoice amount. The increase in prices may be due to the fact that the tax base of P622.20 in DR. No. 31661 and P24,470.50 in DR No. 31660 may be higher than the 10% sales tax base for the same goods that were being sold in 1987. If this be the case, the manufacturer merely increased his profits by increasing the gross selling price. Since there are no price controls, the Bureau of Internal Revenue cannot take any action on the manufacturer for increasing his gross selling price. cd Very truly yours, BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue