Summit Media

August 8, 2007 BIR RULING [DA-434-07] DA 427-03 Summit Media Robinson's Apartelle Edsa corner Pioneer Street Mandaluyong City Attention: Mr. Lance Y. Gokongwei Chairman & Chief Executive Officer Gentlemen : This refers to your letter dated May 18, 2007 stating that Summit Publishing Company, Inc. (Summit) is a corporation duly organized and existing under the laws of the Philippines; that Summit is the publisher of the following magazines, to wit: Candy Disney and Me Hi! K-Zone Marie Claire Men's Health OK! Princess Real Living Seventeen Top Gear Total Girl Witch Smart Parenting and that the above-mentioned magazines appear at regular intervals (i.e., monthly) with fixed prices ranging from P60 to P125 per type of magazine for subscription and sale which are not devoted principally (i.e., not more than 36%) to the publication of paid advertisements; Based on the foregoing representations, you now request for confirmation of your opinion that 1. The importation and sale, whether wholesale or retail, of the above magazines are exempt from value-added tax (VAT); consequently, the sellers thereof should not pass on any VAT to the buyers; 2. The printing of the above magazines is also exempt from VAT; consequently, the printers thereof should not pass on any VAT to Summit; and 3. The publication of the above magazines is likewise not subject to VAT. In reply thereto, please be informed that Section 4.109-1(B)(r) of Revenue Regulations No. 16-2005, implementing Republic Act (R.A.) No. 9337, provides that "(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;" TADaCH shall be exempt from VAT. Prescinding from the above-cited provisions, it is clear that there are four (4) activities that are exempt from the coverage of VAT, i.e., sale, importation, printing and publication of books, newspapers, magazines, reviews and bulletins. Moreover, the features of the said items, like magazine should appear at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisements. DSETac Thus, in stressing the rationale of the above-mentioned provision, this Office elucidated the matter in BIR Ruling No. DA427-03 dated November 25, 2003, as follows: ". . . the sale of magazines and newspapers, or newsletter, the law requires that in order that the same may be exempted from VAT, such newspaper, magazine, review or bulletin must appear at regular intervals with fixed price for subscription and sale and which is not devoted principally to the publication of paid advertisements. In the absence of the above-criteria, your sale of magazines and newspaper shall be subject to the 10% VAT. . . ." WHEREFORE, in view of the foregoing, this Office hereby confirms your opinion that 1. The importation and sale, whether wholesale or retail, of the above magazines are exempt from VAT; consequently, the sellers thereof should not pass on any VAT to the buyers; 2. The printing of the above magazines is also exempt from VAT; consequently, the printers should not pass on any VAT to Summit; and 3. The publication of the above magazines is likewise not subject to VAT. 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. IDAEHT Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service