BIR Ruling No. 164-11

May 23, 2011 BIR RULING NO. 164-11 Sec. 109 (R) of the Tax Code of 1997; BIR Ruling No. DA-427-03; BIR Ruling No. DA-434-07 Comboni Missionaries of the Heart of Jesus 282 Roosevelt Avenue San Francisco del Monte 1105 Quezon City Attention: Fr. Miguel Angel G. Llamazares Major Superior Gentlemen : This refers to your undated letter stating that the Major Superior of the Comboni Missionaries of the Heart of Jesus, Inc. is a religious corporation organized and existing under the laws of the Philippines and duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. 149904 with TIN 001-225-475-000; that it has entered into a business transaction with Lex Media Digital, a corporation organized and existing under the laws of the Philippines with principal office address at Garden Level, Corinthian Plaza, Paseo de Roxas, Makati City bearing TIN 212-006-847-000, for the printing of World Mission Magazine and other religious publications which are part of its evangelization instruments in its mission apostolate throughout the world; and that Lex Media Digital as a value-added tax (VAT) registered entity imposes the 12% VAT on printing services including those rendered to Comboni Missionaries of the Heart of Jesus. aHCSTD Based on the foregoing representations, you now request for exemption from the payment of VAT pursuant to Section 109 (R) of the Tax Code of 1997, as amended by Republic Act (RA) No. 9337, as implemented by Revenue Regulations No. 16-2005, as amended. In reply thereto, please be informed that Section 4.109-1 (B) (r) of Revenue Regulations No. 16-2005, implementing RA No. 9337, provides that "(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;" shall be exempt from VAT. Prescinding 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, newspapers, magazines, reviews and bulletins. Moreover, the features of the said items, like magazine should appear at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisements. Thus, in stressing the rationale of the above-mentioned provision, this Office elucidated the matter in BIR Ruling No. DA-427-03 dated November 25, 2003 , as follows: ". . . the sale of magazines and newspapers, or newsletter, the law requires that in order that the same may be exempted from VAT, such newspaper, magazine, review or bulletin must appear at regular intervals with fixed price for subscription and sale and which is not devoted principally to the publication of paid advertisements. In the absence of the above-criteria, your sale of magazines and newspaper shall be subject to the 10% VAT. . . ." WHEREFORE, in view of the foregoing , this Office hereby holds that the printing of the World Mission Magazine and other religious publications by Lex Media Digital is EXEMPT from VAT. Consequently, the Lex Media Digital should not pass on any VAT to Camboni Missionaries of the Heart of Jesus. 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. IEaATD Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue