Sales to cooperatives, whether or not these are registered with the CDA, are subject to VAT. This is because VAT is a statutory liability of the seller of goods and services. In the absence of any showing that the seller is exempt from tax, the sale cannot be exempted from the imposition of VAT.
VAT is an indirect tax and the amount of tax may be shifted to and passed on to the buyer, transferee or lessee of the goods, properties or service. Therefore, 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 where tax forms part of the cost of acquisition.
(VAT ruling No. 66-2001 dated Oct. 8, 2001. This ruling is issued on the basis of represented facts. However, if upon investigations, it will be disclosed that the facts are different, then this ruling shall be considered null and void).