BIR Ruling No. 186-11

June 22, 2011 BIR RULING NO. 186-11 Section 109 (R) of the Tax Code of 1997, as amended; VAT Ruling No. 22-2000; VAT Ruling No. 22-2001; BIR Ruling No. [DA(VAT-062) 330-09] Vitug Accounting Office c/o Optimus Publishing, Inc. 102 Don Jose St., Siena, Quezon City Attention: Lucila Vitug Inay Accountant Gentlemen : This refers to your undated letter received by this Office on February 2, 2010 requesting on behalf of your client, OPTIMUS PUBLISHING, INC. ("OPI", for brevity), confirmation of your opinion that the sale of books by OPI to the Department of Education ("DepEd") is exempt from the payment of value-added tax (VAT) pursuant to Section 109 (R) of the Tax Code of 1997, as amended by Republic Act (RA) 9337. DaIACS Documents submitted disclose that OPI, with Tax Identification Number (TIN) 398-433-000, is a domestic corporation registered with the Securities and Exchange Commission (SEC) bearing SEC Registration No. CS200514065; that its primary purpose is to carry on the business of publishing and selling books, magazines, periodicals, pamphlets and other printed materials, whether of native or of foreign authorship for use in schools, private or public and other governmental or private entities or organizations here and abroad; that it sold educational books to DepEd; and that one of the requirements for DepEd to release the payment is a Certificate of VAT Exemption; hence, this request. In reply, please be informed that under Section 109 (R) of the Tax Code of 1997, as amended by RA 9337, the 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, is exempt from the imposition of the value-added tax. ( VAT Ruling No. 022-01 dated May 11, 2001) As such, regardless of the amount of the said transaction, it will not be subject to VAT and to the final VAT if the sale was made to government agencies. Neither will it be required to pay the 3% percentage tax under Section 116, in relation to Section 109 (V) of the same Code. [ BIR Ruling No. DA(VAT-062) 330-09 dated June 26, 2009]. In view thereof, OPI's sale of books to the Department of Education is exempt from the payment of the VAT/final VAT and 3% percentage tax. ( VAT Ruling No. 022-00 dated June 23, 2000) However, if OPI has other transactions (such as the printing of brochures) which are subject to VAT, it will be required to register as a VAT business entity and issue separate VAT invoices/receipts to record such transactions. [ BIR Ruling No. DA(VAT-062) 330-09, supra ] 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. ScTIAH Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue