Superbooks, Inc.

March 9, 2007 BIR RULING [DA-149-07] 109; DA-667-2004 Superbooks, Inc. #53 Ermin Garcia Street Brgy. Pinagkaisahan, Cubao Quezon City Attention: Mr. Filemon J. Barbasa III President Gentlemen : This refers to your letter which was received by this Office on March 1, 2007, requesting for a ruling that your sale of books and magazines is exempt from value-added tax. It is represented that Superbooks, Inc. is a corporation duly registered with the Securities and Exchange Commission (SEC) with Company Registration No. CS200520290 issued on December 13, 2005. Its primary purpose is to operate, engage in, conduct, and carry on the business of buying, selling, distributing, marketing at wholesale and retail, such goods such as but not limited to comics or comic books, magazines, periodicals, and other related publications; to enter into all kinds of contracts for the export, import, purchase, acquisition, sale at wholesale or retail, distribution and other disposition for its own account as principal or in representative capacity as manufacturer's representative, merchandise broker, commission merchant indentor, factors or agents upon consignment of all kinds of goods, wares, merchandise or products whether natural or artificial. In reply, please be informed that Section 109 (R) of the 1997 Tax Code, as amended by R.A. 9337, provides: "Sec. 109. Exempt Transactions . (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax. 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." Accordingly, Superbooks, Inc. is exempt from VAT on its sale of books and magazines. (see BIR Ruling No. DA-667-2004 dated December 28, 2004 ) On the other hand, Superbooks, Inc. is not exempt from the VAT that is passed on to it in its purchases of materials in furtherance of its business. As a final purchaser, Superbooks, Inc. pays the VAT not as a tax but as part of the cost of the goods/materials it purchased 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 null and void. cIADTC Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service