Philippine Institute of Certified Public Accountants-Laguna Chapter

December 5, 2008 BIR RULING [DA-(VAT-050) 504-08] VAT Ruling No. 081-91 Philippine Institute of Certified Public Accountants-Laguna Chapter 3F JLT Building, University of Perpetual Help Laguna Sto. Nio, Bian, Laguna Attention: Ms. Sally R. Pangilinan Ex-Officio Director Gentlemen : This refers to your letter dated August 15, 2008 requesting on behalf of your client, Foresight Books Publishing & Distributing Co., Inc. for a ruling exempting it from the payment of value-added tax (VAT) passed on by its supplier. As represented, Foresight Books Publishing & Distributing Co., Inc. is a publisher of books and magazines (the "Asian Dragon"). It is registered with the National Book Development Board under Certificate of Registration No. 2005-0147 with validity period from May 4, 2005 to April 30, 2008. ABS CBN Publishing, Inc. charged Foresight Books Publishing & Distributing Co., Inc. 12% VAT for the printing of its "Asian Dragon" magazines. In reply, please be informed that Section 109 (R) [then Section 109 (y)] of the Tax Code of 1997 as amended by Republic Act No. 9337 provides, viz. : "SEC. 109. Exempt Transactions. (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: ASTDCH xxx xxx xxx (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; xxx xxx xxx" ABS CBN Publishing, Inc.'s sale of service ( i.e. , printing) is, per se, exempt from VAT. Hence, it is not liable to VAT. Such being the case, no VAT shall be passed on by ABS CBN Publishing, Inc. to Foresight Books Publishing & Distributing Co., Inc. for the printing of the latter's magazine, Asian Dragon. In view of the foregoing, your request for exemption of the VAT passed on to Foresight Books Publishing & Distributing Co., Inc. by its supplier, ABS CBN Publishing, Inc. is hereby granted. 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 as null and void. IHaSED Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service