VAT Ruling No. 074-91

August 7, 1991 VAT RULING NO. 074-91 Atty. Artemio M. Lobrin Tax Consultant Suite 314-315 Yunchengco Building 484 Quintin Paredes Street M a n i l a S i r : This refers to your letter dated February 7, 1991, requesting information regarding the purchase of coal by APO Cement Corporation. The queries you posed, with our corresponding replies are as follows: 1. Q: Is coal which the said corporation buys from coal miners or producers for use in the manufacture of its cement subject to input tax? A: Yes, but only the value-added Tax (VAT) component on the purchase of coal shall be considered and taken up as input tax since coal is not only subject to VAT at 10% under Section 100(a) of the NIRC, but also subject to Excise (Specific) Tax of Ten Pesos (P10.00) per metric ton under Section 151 of the same Code. However, the excise tax paid on coal forms part of the taxable base in computing the VAT. 2. Q: If in the affirmative, is such input tax deductible from tax on the sale of its manufactured cement. A: As mentioned in the answer to Query #1, the input tax on the coal purchased and used in the manufacture of cement is creditable against the output tax on APO Cement Corporation's sale of cement pursuant to Section 104 of the Tax Code. aisadc Very truly yours, JOSE U. ONG Commissioner of Internal Revenue