VAT Ruling No. 066-01

October 8, 2001 VAT RULING NO. 066-01 R.A. 6938 105 L&S Chemical Supply, Inc. 24 Paterio Aquino Avenue 1473 Metro Manila Attention: Liberato S. de Jesus President & General Manager Gentlemen : This refers to your letter dated March 8, 2000 requesting for a ruling as to whether or not your sales to cooperatives duly registered with the Cooperative Development Authority (CDA) under R.A. No. 6938, otherwise known as the Cooperative Code of the Philippines is exempt from the value-added tax (VAT). In reply, please be informed that sales to cooperatives whether or not registered with the CDA are subject to VAT because the Value-added tax is the statutory liability of the seller of goods and services so that absent any showing that the said seller is exempt from tax, the sale could not be exempted from the imposition of the VAT. Moreover, it is worthwhile to note that the VAT is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or service. (Section 105, Tax Code of 1997) Accordingly, since cooperatives do not enjoy exemption from indirect taxes, they are liable to shoulder the burden of the passed-on VAT on their purchases of goods and services which tax forms part of their cost of acquisition. Very truly yours, (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal & Inspection Group