Precious Publishing

May 7, 2008 VAT RULING NO. 004-08 Sec. 109 (R); R.A. 9337; VAT Ruling No. 22-2000; DA-448-2006 dtd 7/21/06 Precious Publishing 1957 P. Florentino Street Sampaloc, Manila Attention: Eufrocina A. Deza M a d a m : This refers to the Indorsement Letter dated August 2, 2006, of the Regional Director, Revenue Region No. 6 (Manila) in connection with your request for VAT exemption on the printing and publication of books pursuant to Section 109 (y) of the Tax Code of 1997, as amended by Republic Act No. 9337. It could be discerned from the papers submitted that PRECIOUS PUBLISHING, with business at 1957 P. Florentino St., Sampaloc, Manila, was registered with the Department of Trade and Industry-NCR on March 19, 2002; that it is engaged in printing and publishing services particularly the printing and publishing of textbooks for public schools; that it is also transacting with other government entities such as LTFRB, Local Government Units (LGUs) for their print and publication needs; and that these entities required a Certificate of VAT exemption. Hence, this request. In reply, please be informed that Section 109 (R) of the Tax Code of 1997, as amended by Republic Act No. 9337 dated July 1, 2005, 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. Thus, regardless of the amount, the foregoing transactions will not be subject to the VAT and consequently, to the 5% final withholding VAT prescribed under Section 114 (C) nor to the 3% percentage imposed tax under Section 116, in relation to Section 109 (v), of the same Code. In view thereof, Precious Publishing business activities consisting of publication and printing of textbooks for public schools are exempt from the payment of the VAT and consequently from 5% final withholding VAT. Moreover, it is also exempt from the 3% percentage tax imposed under Sec. 116 of the Tax Code on such activities. However, on its other transactions such as the printing of brochures and other materials not specified under the aforementioned Sec. 109 (R), Precious Publishing shall be subject to the VAT, or to the 3% percentage tax under Section 116 of the same Tax Code if its annual gross receipts from such activities do not exceed P1,500,000.00. Thus, if its gross receipts have already exceeded P1,500,000.00, Precious Publishing is required to register such business activities as subject to the 12% VAT and correspondingly issue a VAT invoice/receipt to your client-buyer. Moreover, its sales to the Government or any of its agencies or instrumentalities including government-owned or controlled corporations (GOCCs) shall be subject to the 5% final withholding VAT. 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. Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner