FLC Press, Inc.

September 12, 2007 BIR RULING [DA-482-07] Sec. 109; DA-464-2003 FLC Press, Inc. 10-A Cavite Street, West Avenue Quezon City Attention: Atty. Francisco L. Chan President and General Manager Gentlemen : This refers to your letter dated June 25, 2007 requesting for exemption from the 3% Creditable Value Added Tax/Percentage Tax pursuant to the provisions of Section 109 (R) of the Tax Code of 1997, as amended. It is represented that FLC Press, Inc. (FLC) is under contract with the Philippine Public School Teachers Association (PPSTA) for the printing of The Herald, a newsletter published quarterly and distributed to all public schools throughout the nation; that since 2004, FLC has been devoted almost exclusively to the printing of the said newsletter in view of the steady decline of printing jobs coming from other sources; that for same reasons, FLC has been experiencing financial reverses and/or severe operational losses that have forced FLC to repeatedly cease operations to dampen overhead costs; and that after a careful examination and/or scrutiny of The Herald, it is FLC's humble position that the same falls squarely within the purview of a newspaper or bulletin as defined in Section 109 (y) of the Tax Code of 1997, the printing or publication of which is exempt from 3% creditable value added tax/percentage tax. In reply, please be informed that Section 109 (R) 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. Neither will you be required to pay the 3% percentage tax under Section 116, in relation to Section 109 (V) of the same Code, as amended. SEcAIC In view thereof, your business of printing and selling of newsletter/bulletin is exempt from the payment of 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 as a VAT business entity and issue a separate VAT invoice/receipt to record such transaction. (BIR Ruling No. DA-454-2003 dated December 5, 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 shall be considered null and void. IHaCDE Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service