VAT Ruling No. 107-89

April 21, 1989 VAT RULING NO. 107-89 Masbate Consolidated Arrastre, Inc. Zurbito St. Masbate, Masbate Attention: Mr. Mario K. Espinosa Chief, Operating Officer S i r s : This is in reply to your letter dated 10 October 1988 endorsed to our office by the Revenue District Officer of Masbate, Masbate. It is represented that Masbate Consolidated Arrastre, Inc., a VAT-registered taxpayer, is having problems with its transactions with VAT-exempt customers who refuse to pay the VAT. You are now requesting that your services to such clients be likewise exempted from VAT. TAcCDI Please be informed that the VAT exemption granted to sellers of agriculture food products e.g. Philippine Agricultural Copra Trading Corp. is limited only to the taxes which they are directly liable to pay. This exemption is not extended to the tax on their purchases of services. Such being the case, the VAT, being an indirect tax, may be passed-on by the VAT-registered seller i.e. Masbate Consolidated Arrastre, Inc. to its clients, e.g. Philippine Agricultural Copra Trading Corporation, as additional costs. Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue