BIR Ruling [DA-455-04]

August 27, 2004 BIR RULING [DA-455-04] Section 109 (y); VAT Ruling No. 022-2000 Ong, Ordoez & Associates Ub 4/F Miriam House, 151 Legaspi Street Legaspi Village, Makati City Gentlemen : This refers to your letter dated August 18, 2004 requesting in behalf of your client, Asia Pacific Circulation Exponents, Inc. for a confirmation that their income is exempt from the Value Added Tax pursuant to the provisions of Section 109 (c) and (y) of the Tax Code of 1997. It is represented that your client is engaged in the selling and distribution of magazines, review or bulletin that appears at regular intervals with fixed prices for subscription like Reader's Digest, Far East Economic Review Magazine, The Asian Wall Street Journal, Time Magazine, The Economist, etc.; that the importation and selling of business related and educational books like A Company of Citizen, Beyond Budgeting, Six Zigma Team Pocket Guide, Time for Kids Atlas 2005, etc. are covered by the exemption; that you invoke Republic Act No. 8047, otherwise known as the Book Publishing Industry Development Act. In reply, please be informed that Section 109, par. (y) of the Tax Code of 1997, 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, you will not be subject to the VAT and consequently from the creditable VAT. In view thereof, the business of publishing and selling of books is exempt from the payment of the Value Added Tax/Creditable 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. TcEaDS This ruling is being issued on the basis of the foregoing facts as represented. If upon investigation, it will be discovered that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service