BIR Ruling No. 117-13

March 22, 2013 BIR RULING NO. 117-13 Section 109 (1) (R) of the Tax Code of 1997, as amended; BIR Ruling No. 164-11; BIR Ruling No. 340-11; and BIR Ruling No. 503-11 Institute for Inner Studies Publishing Foundation, Inc. 15-A Samat St., Banawe Quezon City Attention: Catherine Choachuy President Gentlemen : This refers to your letter dated 13 June 2011 , requesting for exemption from the payment of Value-Added Tax (VAT) pursuant to Section 109 (1) (R) of the Tax Code of 1997, as amended. cDHCAE It is represented that Institute for Inner Studies Publishing Foundation, Inc. (IISPFI) with Tax Identification Number 234-443-853 is a non-stock and non-profit corporation organized and existing under the laws of the Philippines and duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200413583 and that its main activity is to publish, produce and distribute the books and compact disks/cassettes authorized, written and recorded by Master Choa Kok Sui. In reply thereto, please be informed that Section 109 (1) (R) of the Tax Code of 1997, as amended, provides that "SEC. 109. Exempt Transactions. (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax. (A) . . . (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;" Based from the above-cited provisions, it is clear that there are four (4) activities that are exempt from the coverage of VAT, i.e. , sale, importation, printing and publication of books and newspapers, magazines, review or bulletins. Moreover, the said items, like newspapers, magazine, review or bulletin should appear at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisements. (BIR Ruling No. 164-11 dated May 23, 2011) Accordingly, IISPFI is exempt from VAT on its sale, importation, printing or publication of books of Master Choa Kok Sui or other authors. However, per Articles of Incorporation of IISPFI, it may engage in other activities like the distribution of posters, pamphlets, brochures, compact disk/cassettes recorded by Master Choa Kok Sui or other authors. Compact disk/cassettes or other media, posters, pamphlets, brochures do not come within the purview of the term "books or any similar publication" for purposes of Section 109 (1) (R) of the 1997 Tax Code, as amended, hence not embraced by the VAT exemption under the said law. (BIR Ruling 340-11 dated September 7, 2011) Furthermore, with regard to reading materials in electronic form, this Office ruled that e-journals and the sale of e-learning products, being outside the purview of the term "books or any similar publication" for purposes of Section 109 (R) of the 1997 Tax Code, are subject to the 12% VAT. (BIR Ruling No. 503-11 dated December 15, 2011) 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. TEDaAc Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue