Smartbooks Publishing

December 10, 2009 BIR RULING [DA-(VAT-111) 764-09] Section 109 (R); DA-75-2008 Smartbooks Publishing 3 Kulambo St., Urduja Village Caloocan City Attention: Ms. Salud B. Villa Proprietress Gentlemen : This refers to your undated letter requesting for a ruling exempting Smartbooks Publishing from the payment of value-added tax (VAT) pursuant to Section 109 (R) of the Tax Code of 1997, as amended. It is represented that Smartbooks Publishing with TIN 931-008-934-000 is engaged in the business of publishing educational books; that it is registered with the Department of Trade and Industry under Certificate of Registration No. 00729012 dated April 28, 2009. 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: 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" In view of the foregoing, your business of selling educational books, magazines and newspapers is exempt from VAT provided they comply with the requisites under Section 109 (R) of the Tax Code of 1997, as amended. TAacIE However, since Smartbooks Publishing is also engaged in the sale of school and office supplies, transactions with are subject to VAT, you are required to register as a VAT business entity and issue the appropriate receipts for such transaction. Moreover, Smartbooks Publishing is subject to VAT that is passed on to it in its purchase of materials in furtherance of its business. As a final purchaser, it pays the VAT not as a tax but as part of the cost of goods/materials it purchases from the seller/supplier. 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner Legal and Inspection Group