BIR Ruling No. 049-11

February 16, 2011 BIR RULING NO. 049-11 Section 109 (R); BIR Ruling No. DA-(VAT-037) 211-09; BIR Ruling No. DA (VAT-013) 092-08 Reach Out Educational Resources No. 277 4th Street, 10th Avenue Grace Park, Caloocan City Attention: Rico Y. Samson Proprietor and General Manager Gentlemen : This refers to your letter dated June 15, 2009 requesting in effect, for exemption from value-added tax (VAT) or 3% percentage tax pursuant to the provisions of Section 109 (R) of the Tax Code of 1997, as amended. It appears that Reach Out Educational Resources , ("REACH OUT" for brevity), a single proprietorship, is duly registered with the Department of Trade and Industry dated January 26, 2005 with Taxpayer Identification Number (TIN) 103-286-350-002; is engaged in printing, publishing, distribution and selling of textbooks and instructional materials on national and local government units (provincial, Department of Education, municipal and city government) and that in the course of your recent transactions with the different LGUs, you were requested to provide them a ruling from this Office granting you an exemption from the payment of value-added tax (VAT) or 3% percentage tax. In reply, please be informed that Section 109, par. (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 the VAT. As such, regardless of the amount of the said transaction, you will not be subject to said tax and consequently to the creditable VAT or to the 3% percentage tax under Section 116, in relation to Section 109 (V) of the same Code. HCEaDI In view thereof, your business of selling of books, magazines and newspapers is exempt from the payment of VAT/creditable VAT and from the 3% percentage tax, provided they appear at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisements. However, since you are also engaged in the sale of school supplies, a transaction subject to VAT, you are required to register as a VAT business entity and issue a separate VAT invoice/receipt to record such transactions. 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, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue