Buying and Selling of TV Airtime Constitutes the Rendition of Service to Others for a Consideration Subject to 10% VAT

July 16, 1991 BIR RULING NO. 134-91 102 (a) 000-00 132-91 Gentlemen : This refers to BIR Ruling No. 170-174-188-83-397-87 dated December 15, 1987 to the effect that your gross receipts from the sale of TV airtime is not subject to 4% contractor's tax imposed under then Section 170 of the Tax Code nor to the 7% commercial broker's tax under then Section 174 of the Tax Code. In connection thereto, please be informed that after a restudy of the above ruling, this Office finds the same devoid of legal basis. While airtime is an intangible property, the sale of a specific TV airtime contemplates the use by the contractee-buyer of television broadcast facilities of the station owner and/or availment of services of the latter wherein the consideration is measured by the length of time allowed to the buyer to use TV broadcast facilities. In other words, when you purchase TV airtime to telecast programs and shows through the use of such facilities, the station owner sells time spots to advertisers and flash their advertisements within a specific time in between programs or shows, this constitutes rendering of services for a consideration. In view thereof, the above ruling has to be, as it is hereby revoked. Since the value-added tax has replaced, among others, the contractor's and broker's taxes effective January 1, 1988, the buying and selling of TV airtime constitutes the rendition of service to others for a consideration subject to the 10% value-added tax imposed under Section 102 (a) of the Tax Code. aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner