Linar Educational Materials, Inc.

June 4, 2010 BIR RULING [DA-(VAT-013) 087-10] Section 109 (R); DA-634-07; DA-464-03 & VAT 082-02 Linar Educational Materials, Inc. Unit A, Ground Floor Tempus Place Condominium 2 21 Makatarungan St., Central, Quezon City Attention: Ms. Erlinda S. Cagigas President Gentlemen : This refers to your letter dated April 20, 2010 requesting for a value-added tax (VAT) exemption certificate pursuant to the provisions of Section 109 (R) of the Tax Code of 1997, as amended. cSATDC It is represented that Linar Educational Materials, Inc. ("Linar" for brevity) is a stock corporation registered with the Securities and Exchange Commission on March 6, 1997; that it is engaged primarily in the importation and sale of educational books; that it is duly registered with the Bureau of Internal Revenue (BIR) as a NON-VAT EXEMPT corporation with Taxpayers Identification No. 005-201-738-000; and that it enters into government school contracts for the supply of educational books and textbooks, hence, this request for exemption from the payment of VAT on its importation and sale of books and textbooks, and from the coverage of the 5% final VAT. In reply, please be informed that Section 109 (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 VAT. Accordingly, and since Linar is engaged in the importation and sale of educational books, it is therefore exempt from the payment of VAT and consequently, from the coverage of the final VAT on its contracts with government schools as required under Section 4.114 of Revenue Regulations No. 2-98, as amended. Likewise, its sale of educational books is exempt from the 3% percentage tax imposed under Section 116, in relation to Section 109 (V) of the same Code, as amended. (BIR Ruling No. DA-464-2003 dated December 5, 2003 citing VAT Ruling No. 082-2002 dated November 20, 2002 and BIR Ruling No. DA-634-07 December 7, 2007) 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, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner