VAT Ruling No. 016-03

January 21, 2003 VAT RULING NO. 016-03 Sec. 109 (y), Tax Code of 1997 VAT Ruling No. 33-2002 Book Media Press, Inc. 21-e Boni Serrano Avenue Quezon City Attention: Mr. Benito Javierto Brizuela President Gentlemen : This refers to your letter dated September 2, 2002 requesting for a certification that your contract with the Department of Education for the printing and delivery of textbooks and teachers' manuals is exempt from value-added tax (VAT). It is represented that Book Media Press, Inc. (BMPI) is a registered member of the National Book Development Board (NBDB) as accredited book printer and book publisher; that the Department of Education awarded to BMPI a contract for the printing and delivery of textbooks and teachers' manuals under the Secondary Education Development and Improvement Project and Social Expenditure Management Project in the total amount of twenty million eight hundred thirty two thousand nine hundred twenty one pesos & 90/100 (P20,832,921.90) and that as a registered member of NBDB and as accredited printer of the Department of Education, BMPI is exempt from VAT under Republic Act No. 8047, otherwise known as the "Book Publishing Industry Development Act." SaHIEA In reply, please be informed that Section 109 (y) of the National Internal Revenue Code of 1997 (NIRC), the following are exempt from VAT: "(y) 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; and . . ." In VAT Ruling No. 33-2002 citing BIR Ruling No. 59-96, it was held that: "In connection therewith, please be informed that pursuant to Section 12 of Republic Act No. 8047, the sale of books . . . including book publishing and printing as well as its distribution and circulation, shall be exempt from the coverage of the Expanded Value-Added Tax (EVAT) Law. Section 3 (a) and (b) of R.A. No. 8047 provides that the term "book" as defined by the United Nations Educational Scientific and Cultural Organizations (UNESCO) 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. The term "textbook" shall mean a book which is an exposition of generally accepted principles in one (1) subject, intended primarily as a basis for instruction in a classroom or pupil-book-teacher situation." The word "Manual" means "a book that is conveniently handled; esp. HANDBOOK." (Merriam Webster's Collegiate Dictionary, tenth edition) ACaEcH Accordingly, the "textbooks and teacher's manuals" covered by BMPI's contract with the Department of Education may legally be treated as "Books" provided they meet the above quoted statutory requirement under Section 3 (a) and (b) of R.A. 8047 and as such, the printing and delivery of the said "textbooks and teacher's manuals" shall be exempt from VAT under the afore-quoted Section 109 (y) of the NIRC. 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, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group