VAT Ruling No. 012-03

January 15, 2003 VAT RULING NO. 012-03 Sec. 109 (y) 109 (z) 022-00 The Manila Times Publishing Corporation 371 A. Bonifacio Drive Port Area, Manila Attention: Mr. Dante Francis M. Ang II Executive Vice President Gentlemen : This refers to your letter requesting for a ruling as to whether or not the gross receipts you derive as publisher of newspapers and magazines, including your receipts relating to advertisements in the said newspapers and magazines, is exempt from both the value-added tax and percentage tax. It is represented that the Manila Times Publishing Corporation is the publisher of the Manila Times, Kabayan, Health News, Kiddie Magazine, E-Magazine, Diwaliwan and Metro News which are devoted primarily to the circulation of the news items and appear at regular intervals with fixed prices for subscription and for sale to the general public and are not devoted principally to the publication of paid advertisements. In reply, please be advised that pursuant to Section 109, par. (y) of the Tax Code of 1997, 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. In a similar request for ruling, this Office opined in VAT Ruling No. 022-00 dated June 23, 2000 as follows: "In reply, please be advised of the following: "Under Sec. 109, par. (y) of the Tax Code of 1997, 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. As such, regardless of the amount of the said transaction, it will not be subjected to the value-added tax, neither will it be required to pay the 3% percentage tax under Sec. 116, in relation to Sec. 109(z) of the same Code." "In view thereof, your business of publishing and selling of books (newspapers and magazines in this particular case), is exempt from the payment of the value-added tax and from the 3% percentage tax. However, if you have other transactions (such as the printing of brochures), which are subject to the value-added tax, you will also be required to register your business as a VAT business entity and issue a separate VAT invoice/receipt to record such transactions." It can be gleaned that since your published newspapers and magazines are not devoted principally to the publication of paid advertisements, but rather to circulate news items, the gross receipts relating to advertisements will not likewise be subject to value-added tax nor to the percentage tax. This ruling is being issued on the basis of the foregoing facts as represented. If upon investigation, it will be discovered that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group