BIR Ruling No. 018-12

January 11, 2012 BIR RULING NO. 018-12 Section 109 (R) of the Tax Code of 1997; BIR Ruling No. 186-2011 Golden Books International Trading, Inc. Stall 8 Cubao Expo, General Romulo Avenue, Cubao, Quezon City Attention: Mr. Cerebicadon B. Yamzon President Gentlemen : This refers to your letter dated June 22, 2011, requesting tax exemption on the transactions pertaining to the sale of books to the national and local government units. It is represented that GOLDEN BOOKS INTERNATIONAL TRADING, INC. with Taxpayer Identification No. 005-587-359-000, is a stock corporation duly organized under the laws of the Philippines; that it is registered with the Securities and Exchange Commission (SEC) under SEC Reg. No. CS200419568; that it is engaged primarily in the importation and sale of educational books; 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 value-added tax (VAT) on its importation and sale of books and textbooks. 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: TCcSDE 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;" Accordingly, and since GOLDEN BOOKS INTERNATIONAL TRADING, INC. 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. (BIR Ruling No. 186-2011 dated June 22, 2011) However, if GOLDEN BOOKS INTERNATIONAL TRADING, INC. has other transactions (such as the printing of brochures) which are subject to VAT, it will be required to register as a VAT business entity and issue separate VAT invoices/receipts to record such transactions. (BIR Ruling No. 186-2011 dated June 22, 2011) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. CIaDTE Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue