St. Martin De Porres Publications

January 17, 2008 BIR RULING [DA-018-08] DA-464-2003; Sec. 109 (R), NIRC; Sec. 9. 236-1 (b), RR 16-2005, RR 4-07 St. Martin De Porres Publications #29 Sta. Lucia Village, Bacoor, Cavite Attention: Lucia Ras Carrascoso SMDP Gen. Manager, Proprietress This refers to your letter dated December 20, 2007 requesting for VAT exemption on your sales of school textbooks and supplementary educational materials pursuant to the provisions of Section 109 (R) of the Tax Code of 1997, as amended by Republic Act (RA) No. 9337. cAHDES It is represented that St. Martin de Porres ("SMDP", for brevity) is a local publisher and exclusive distributor of textbooks and supplementary educational materials to the Department of Education and Local Government Schoolboards (LGSs); that it is registered with the Department of Trade and Industry (DTI) as a sole proprietorship; and that it is also registered with the BIR, Philippine Government Electronic Procurement System (PhilGEPS) and is also a member of the National Book Development Board (NBDB). In reply, please be informed that Section 109 (R) of the same Tax Code provides that: "Sec. 109. Exempt Transactions Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from VAT: xxx xxx xxx (R) Sale, importation, printing or publication of books and any newspaper, magazine, review or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisements." IHaCDE From the above provision, it is evident that SMDP's sales of textbooks and supplementary educational materials to the Department of Education and LGSs are exempt from the payment of 12% VAT as long as such printed material appear at regular intervals with fixed prices for subscription and sale and which are not devoted principally to the publication of paid advertisements. However, if SMDP engages in other business activities other than those that are VAT-exempt under Section 109 (1) (A) to (U) of the same Tax Code and there are reasonable grounds to believe that such activities will generate or actually do generate gross sales or receipts in excess of One Million Five Hundred Thousand Pesos (P1,500,000.00), SMDP will be required to register as a VAT business entity and issue separate VAT invoices/receipts to record such transactions in accordance with Section 9, 236-1 (b) of Revenue Regulations (RR) No. 16-2005, as amended by RR-4-07. HTCESI This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. ATCaDE Very truly yours, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner Legal & Inspection Group