Books on Wheels Enterprises

February 6, 2008 BIR RULING [DA-075-08] Section 109 (R); DA-149-2007 Books on Wheels Enterprises Champaca Street, Villa Perpetua Subdivision Matatalaib, Tarlac City Attention: Ms. Erlinda M. Santiago General Manager/Proprietress Gentlemen : This refers to your letter dated January 8, 2008 requesting for a ruling exempting Books on Wheels Enterprises from the payment of value-added tax (VAT). As represented, Books on Wheels Enterprises is a publishing outfit that sells textbooks and other instructional materials accredited by the Department of Education. Books on Wheels Enterprises is registered with the Department of Trade and Industry under Certificate of Registration No. 00217650 dated October 21, 2003, the National Book Development Board under Certificate of Registration No. 2005-0045 with validity period from June 7, 2005 to April 30, 2008 and the Philippine Government Electronic Procurement System under Certificate of Registration No. 2004-14080 dated August 21, 2007. In reply, please be informed that Section 109 (R) [then Section 109 (y)] of the Tax Code of 1997 as amended by Republic Act No. 9337 provides, viz .: "SEC. 109. Exempt Transactions. (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: SCcHIE 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; xxx xxx xxx" In view of the foregoing, Books on Wheels Enterprises is exempt from VAT on its sale of books and instructional materials. However, Books on Wheels Enterprises is not exempt from the VAT that is passed on to it in its purchase of materials in furtherance of its business. As a final purchaser, it pays the VAT not as a tax but as part of the cost of goods/materials it purchases from the seller/supplier. 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 as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service