BIR Ruling No. 019-11

January 21, 2011 BIR RULING NO. 019-11 Section 109 (R); BIR Ruling No. [DA-(VAT-050)504-08; BIR Ruling No. [DA-(VAT-002)026-08; BIR Ruling No. [DA-(VAT-111)764-09] Intramuralla Bookstore Corporation Lyceum of the Philippines Real cor. Muralla Street, Bgy. 658 Zone 070 District V, Intramuros, Manila Attention: Ms. Susana O. Floresca Gentlemen : This refers to your letter dated September 15, 2009 requesting for a ruling exempting Intramuralla Bookstore Corporation 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 Intramuralla Bookstore Corporation with TIN 249-810-212-000 is engaged in the business of retail sale of specialized/educational books; that it is registered with the Securities and Exchange Commission under SEC Registration No. CS200602907 dated March 9, 2006. 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; cDEHIC 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 by R.A. No. 9337. However, since Intramuralla Bookstore Corporation is also engaged in the sale of school and office supplies, transactions which are subject to VAT, it is required to register as a VAT business entity and issue the appropriate receipts for such transactions. Moreover, Intramuralla Bookstore Corporation 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. (BIR Ruling No. [DA-(VAT-111)764-09] dated December 10, 2009) 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, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue