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. 135-91 102 (a) 000-00 135-91 Gentlemen : This refers to BIR Ruling No. 205-000-00-188-83 dated November 4, 1988 to the effect that your client, Absolute Sound, Inc. is not subject, among others, to the 3% contractor's tax imposed by then Section 205 of the Tax Code because by buying and selling TV airtime, your said client is not rendering service or labor; and that it is not also subject to the 6% broker's tax imposed under then Section 208 of the same Code because it does not sell or bring about sales or purchases of merchandise for other persons. 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 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 and 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 consideration subject to the 10% value-added tax imposed under Section 102 (a) of the Tax Code. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner