BIR Ruling [DA-178-97]

April 16, 1997 BIR RULING [DA-178-97] National Book Development Board U.P. Compound Diliman, Quezon City Attention: Dr. Nellie R. Apolonio Executive Director Gentlemen : In connection with your draft Rules and Regulations to Implement R.A. No. 8047, please be informed of the latest tax exemption laws of books and of our position affecting its taxability. 1. Pursuant to RA No. 8241 effective January 1, 1997 the original tax exemption clause under Section 103 (f) of the Tax Code relative to books and the publication industry in general has been fully restored as Section 103 (y) of the same code quoted below: "Sec. 103. Exempt Transactions . The following shall be exempt from the value-added tax: "xxx xxx xxx "(y) sale, importation, printing or publication of books and any newspaper, magazine, review or bulletin which appears at a regular intervals with fixed price for subscription and sale and which is not devoted principally to the publication of paid advertisements" EITcaD In view thereof, and to avoid the unnecessary distinction between commercial and/or non-commercial importation of books for tax exemption purposes, it is recommended that Rule III of the draft Rules and Regulations on the Importation of Tax and Duty-Free Books should be retitled "Tax Incentives" instead of the general term "Coverage". The content thereof shall be the above provision of RA 8241. 2. Gleaned from the following definition of books stating " Functionally , one can define the book as a more or less coherent body of graphic communication assembled into one or several units for the purpose of systematic presentation and preservation of lastingly valuable material. It is this element of preservation, this retention of experiences, observation, and creative expressions of lasting value, that distinguishes the book from a variety of more transitory communication. (p. 220, Encyclopedia Americana Volume 4)" "Book, in publishing, has been defined by UNESCO for statistical purposes as a "non-periodical printed publication of at least 49 pages excluding covers" but no strict definition satisfactorily covers the variety of publication so identified. (p. 152, The New Encyclopedia Britannica, Vol. II)" (Emphasis supplied) it is our opinion that the functional rather than the statistical definition of book should be adopted. It is more descriptive of what the thing is and less likely to create, difficulty in applying the tax exemption clause if the pages are more, or less than 48 pages. Accordingly, the draft Rules and Regulation Implementing RA No. 8047, Otherwise Known as The Book Publishing Industry Development Act should reflect the same with the following limiting clauses: ". . . this definition shall include 1.1 children's books; 1.2 children's educational comic; 1.3 bookmics, which is a combination of a book and a comics; 1.4 scientific, cultural, medical, architectural and professional magazines; and 1.5 other educational and informational materials. 3. With respect to the draft Rules and Regulations on the Importation of Tax and Duty-Free raw Materials Used for Book Publishing, it is suggested that Rule II Section 1, should define raw materials as follows: Raw Materials for purposes of tax and duty-free importation under these Regulations shall be limited only to paper, ink and book cloth. TCEaDI Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue