BIR Ruling [DA-092-06]

March 7, 2006 BIR RULING [DA-092-06] 114 (C); VAT 033-02 Trinitas Publishing, Inc . R-203 Hillcrest Condo. 1616 E. Rodriguez Senior Avenue Quezon City Attention: Ms. Maria Trinitas Canlas President Gentlemen : This refers to your letter dated January 28, 2006 requesting for an opinion as to whether or not printing, publishing and sale of books is exempt from value-added tax (VAT) and consequently from the 5% final creditable VAT as prescribed in Section 114(C) of the Tax Code of 1997, as amended by Republic Act (R.A.) No. 9337, as implemented by Revenue Regulations No. 16-2005. It appears that your company is engaged in the printing, publishing and sale of books; and that it is duly registered with the BIR as a Non-VAT entity with Tax Identification Number (TIN) 001-859-050. In reply thereto, please be informed that Section 109(R) of RA No. 9337, as implemented by Section 4.109-1(B)1(r) of Revenue Regulations No. 16-2005, provides that "(B) Exempt transactions. (1) 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; xxx xxx xxx" Thus, in BIR VAT Ruling No. 33-2002 dated May 8, 2002 which is a reiteration of BIR Ruling No. 059-96 dated May 21, 1996 , the BIR ruled that "In connection therewith, please be informed that pursuant to Section 12 of Republic Act No. 8047, the sale of books . . . including book publishing and printing as well as its distribution and circulation, shall be exempt from the coverage of the Expanded Value-Added Tax (EVAT) Law Section 3(a) and (b) of R.A. No. 8047 provides that the term "book" as defined by the United Nations Educational Scientific and Cultural Organization (UNESCO) is a printed non-periodical publication of at least forty-eight (48) pages, exclusive of cover pages, published in the country and made available to the public. The term "textbook" shall mean a book which is an exposition of generally accepted principles in one (1) subject, intended primarily as a basis for instruction in a classroom or pupil-book-teacher situation." "The word "Manual" means a book that is conveniently handled; esp. HANDBOOK." (Merriam Webster's Collegiate Dictionary, tenth edition) "Accordingly, the aforementioned "textbooks and teacher's manuals" may legally be treated as "Books" provided they meet the above quoted statutory requirement under Section 3(a) and (b), R.A. No. 8047, i.e., "at least forty-eight pages, exclusive of cover pages." In the affirmative, the supply of the said "textbooks and teacher's manuals," to the DECS, shall be VAT-exempt under Section 109(y), NIRC of 1997, hence, also exempt from the 3% creditable VAT withholding otherwise prescribed under Section 114(C), NIRC of 1997, as implemented by Section 4.114(A), Revenue Regulations No. 02-98. "xxx xxx xxx" IN VIEW OF THE FOREGOING CIRCUMSTANCES, this Office, holds that the printing, publishing and sale of books to the government is not subject to VAT and consequently to the 5% final creditable VAT prescribed in Section 114(C) of the Tax Code of 1997, as amended by R.A. No. 9337, as implemented by Revenue Regulations No. 16-2005. 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. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service