FILBAR'S International Subscription System, Inc. (FISSI)

July 20, 2007 BIR RULING [DA-398-07] 109; DA-149-2007 FILBAR'S International Subscription System, Inc. (FISSI) #53 Ermin Garcia St. Bgy. Pinagkaisahan Cubao, Quezon City Attention: Mr. Filemon J. Barbasa III President/CEO Gentlemen : This refers to your letter dated July 10, 2007 requesting for a ruling that your sale of books and magazines is exempt from value-added tax. It is represented that Filbar's International Subscription System, Inc. (FISSI) is a corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CS200706557 dated May 2, 2007. 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. TSCIEa In reply, please be informed that Section 109 (R) of the Tax Code of 1997, as amended by RA 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, FISSI is exempt from VAT on its sale of books and magazines. However, it is not exempt from VAT on its purchases 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 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. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service