BIR Ruling No. 421-13

November 14, 2013 BIR RULING NO. 421-13 Sec. 109 (1) (R) of the Tax Code of 1997, as amended; 000-00 The Midtown Printing Co., Inc. MPCI Bldg., Bonifacio St. Davao City Attention: Gabby B. Atega President Gentlemen : This refers to your letter dated June 10, 2013, requesting for a ruling on the Vatability of the printing of yearbooks that you have contracted with different schools or with the school's designated student group. Documents submitted disclosed that The Midtown Printing Company, Inc. (TIN 000-076-315-000), is a domestic corporation engaged to carry on a business as printers, booksellers, bookbinders, publishers, publishers of newspapers, journals, lithographers, stereotypes, photographic printers and any other business similar or analogous to the foregoing or any of them; that it is registered with the Securities and Exchange Commission (SEC) under SEC Registration No. 44764; and that you printed yearbooks contracted with school or with the school's designated student group (usually the editorial board of the yearbook), without charging any Value Added Tax (VAT). In that connection, you would like to request a confirmation of your opinion that the printing of yearbooks is exempted from VAT. In reply, please be informed that Section 109 (1) (R) of the Tax Code, as amended, 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 VAT. " The above provision is being implemented by Revenue Regulations (RR) No. 16-2005. Section 4.109-1 (B) (r) thereof, 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;" aITDAE 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. The term "book" has been defined as "A literary composition which is printed; a printed composition bound in volume." (Scoville V Toland 21 Fed. Cas. 864 Black's Law Dictionary) Moreover, Section 3 (a) of Republic Act (RA) No. 8047 known as the "Book Publishing Industry Development Act" as defined by the United Nations Educational Scientific and Cultural Organization (UNESCO), "Book" is a printed non-periodical publication of at least forty-eight (48) pages, exclusive of cover pages, published in the country and made available to the public. Anent the above, a yearbook does not come within the purview of the term "book" as define in Black's Law Dictionary and RA 8047 for the purpose of VAT exemption as provided under Section 109 (1) (R) of the aforesaid of the Tax Code. It should be remembered that laws and statutes granting tax exemptions are strictly construed against the taxpayer. Exemptions are never presumed and the burden is upon the taxpayer to establish his right to exemption beyond reasonable doubt. 1 In the case of Mactan Cebu International Airport Authority v. Marcos , 2 the Supreme Court held: "Accordingly, tax statutes must be construed strictly against the government and liberally in favor of the taxpayer. But since taxes are what we pay for civilized society, or are the lifeblood of the nation, the law frowns against exemptions from taxation and statutes granting the exemptions are thus construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority. A claim of exemption from tax payments must be clearly shown and based on language in the law too plain to be mistaken. Elsewise stated, taxation is the rule, exemption therefrom is the exception." In view of the foregoing, the request for confirmation for opinion that the printing of yearbooks is exempted from VAT, is hereby denied for lack of legal basis. 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. EcTCAD Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue Footnotes 1. Dimaampao, Japar B., Tax Principles and Remedies, Second Edition (2005). 2. G.R. No. 120082, 11 September 1996, 261 SCRA 667.