BIR Ruling [DA-384-06]

June 21, 2006 BIR RULING [DA-384-06] 109 (r); R.R. 16-2005; 022-02; 012-2003 Taipan Morning Post, Inc . No. 833 Sabino Padilla Street Sta. Cruz, Manila Gentlemen : This refers to your letter dated May 2, 2006 requesting a ruling whether or not the gross receipts that Taipan Morning Post, Inc. (TMPI for brevity) derives as a publisher of a newspaper, including the receipts relating to advertisements in the said newspaper, are exempt from both the value-added tax and percentage tax. TMPI is the publisher of the Taipan Morning Post which is devoted primarily to the circulation of news items and appears daily with a fixed price for subscription and for sale to the general public and is not devoted principally to the publication of paid advertisements. It is your understanding that the sale, printing or publication of the Taipan Morning Post is exempt from VAT pursuant to Section 109, par. (r) of the Tax Code of 1997, as amended by Republic Act No. 9337 and as implemented by Revenue Regulations No. 16-2005. In reply, please be informed that under Sec. 109, par. (r) of the Tax Code of 1997, as amended, 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, is exempt from the imposition of the value-added tax. As such, regardless of the amount of the said transaction, it will not be subjected to the value-added tax, neither will it be required to pay the 3% percentage tax under Sec. 116, in relation to Sec. 109(v) [formerly Sec. 109(z)] of the same Code. In view thereof, TMPI's business of publishing newspaper, is exempt from the payment of the value-added tax and from the 3% percentage tax. However, if you have other transactions (such as the printing of brochures), which are subject to the value-added tax, you will also be required to register your business as a VAT business entity and issue a separate VAT invoice/receipt to record such transactions. Moreover, the gross receipts relating to advertisements published in the newspaper are not subject to the value-added tax nor to the percentage tax imposed under Secs. 106 and 116, both of the Tax Code of 1997, as amended, respectively. (VAT Ruling Nos. 022-00 dated June 23, 2000 and 012-2003 dated January 15, 2003) 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 will be considered null and void. AcHSEa Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service