Caneo Enterprises

July 8, 2010 BIR RULING [DA-(VAT-018) 118-10] Section 109 (R); DA-634-07; DA-464-03 & VAT 082-02 Caneo Enterprises 7344 A. Bonifacio Extension San Dionisio, Paraaque City Attention: Mr. Virgilio I. Bago Manager Gentlemen : This refers to your letter dated February 11, 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. It is represented that Caneo Enterprises is engaged in publishing and printing activities; that it is duly registered with the Bureau of Internal Revenue (BIR) with Taxpayers Identification No. 126-771-482-000; and that it enters into publishing and printing contracts of educational materials, i.e. , textbooks, supplementary and reference materials, and instructional materials, for both private and government institutions, hence, this request for exemption from the payment of the 12% VAT on its publishing and printing transactions, and from the coverage of the 5% final VAT withheld on government contracts for the sale and/or printing of textbooks, supplementary and reference materials, and instructional materials for the government schools. IcDCaS 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 Caneo Enterprises is engaged in the business of publishing, printing and selling of educational materials, i.e. , textbooks, supplementary and reference materials, and instructional materials, for both private and government institutions, 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 materials 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