VAT Ruling No. 064-91

June 27, 1991 VAT RULING NO. 064-91 Century Canning Corporation 32 Barrio Bagumbayan Taguig, Metro Manila Attention: Angeline Gan Santos Chief Accountant S i r s : This has reference to your application for zero-rate filed last October 22, 1990, stating that you have sold canned sardines and tuna to the BIR Consumers Cooperative, Inc., and that said entity refused to pay the incorporated 10% VAT on the basis of the exemption privilege granted to cooperatives under Republic Act No. 6938, otherwise known as the Cooperative Code of the Philippines. Based on the foregoing, you now request clarification whether your sale of goods to said entity qualifies for Zero-rated VAT. In reply thereto, please be informed that the exemption privilege granted to cooperatives is limited only to taxes for which they are directly liable. The VAT, being an indirect tax, can be shifted to them and once shifted, it forms part of the cost of goods purchased. The shifting of the VAT to purchasers does not make them directly liable therefor; hence, they cannot invoke exemption privileges granted to them. Such being the case, your application for zero-rate is hereby denied for lack of legal basis. Your sale to the BIR Consumer's Cooperative, Inc. is subject to the 10% VAT under Section 100(a) of the Tax Code. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue