BIR Ruling No. 095-12

February 16, 2012 BIR RULING NO. 095-12 Sec. 109 (R), 1997 NIRC, as amended RR 16-2011; RR 4-2007; RR 16-2005; BIR Ruling No. 018-2012; BIR Ruling No. 186-2011 OVT-Graphic Line, Inc. 23 A. Mabini St.,Upper Plaza West Rembo, Makati City Attention: Mr. Orlando V. Tan President Gentlemen : This refers to your letter dated July 17, 2010, as indorsed by the Chief of Legal Division, Revenue Region No. 8, Makati City, requesting for exemption from value-added tax (VAT) as publisher of educational books. Documents submitted show that OVT-Graphic Line, Inc. (TIN 006-864-201-000) is a corporation engaged in the publication and printing of educational textbooks and other supplementary reading materials approved by the National Printing Office and with SEC Company Reg. No. CS200713385 dated August 24, 2007. It was issued Certificate of Registration No. 0999 by the National Book Development Board (NBDB) on March 3, 2008 as Book Publisher, Book Printer and that said Certification is valid until April 30, 2011. In reply, please be informed that Section 109 (R) of the National Internal Revenue Code (NIRC) of 1997, states that: "Sec. 109. Exempt Transactions. Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the VAT: 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 which is not devoted principally to the publication of paid advertisements." From the above provision, OVT-Graphic Line, Inc.'s printing or publication of textbooks and newspaper, magazine, review or bulletin is exempt from the payment of 12% VAT as long as such reading materials appear at regular intervals with fixed prices for subscription and sale and which are not devoted principally to the publication of paid advertisements. IADCES However, if OVT-Graphic Line, Inc. engages in other business activities other than those that are VAT-exempt under Section 109 (1) (A) to (U) of the same Code and there are reasonable grounds to believe that such activities will generate or actually do generate gross sales or receipts in excess of One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919,500.00), 1 OVT-Graphic Line, Inc. will be required to register as a VAT business entity and issue separate VAT invoices/receipts to record such transactions in accordance with Section 9, 236-1 (b) of Revenue Regulations (RR) No. 16-2005, as amended by RR-4-07. 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 as null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue Footnotes 1. The increase in the threshold amount for sale or lease of goods or properties or the performance of services other than the transactions mentioned in Sections 109 (1) (A) to (U) of the NIRC of 1997, as amended, the gross annual sales and/or receipts do not exceed P1,919,500.00 took effect on January 1, 2012, pursuant to Revenue Regulations No. 16-2011 dated October 27, 2011.