VAT Ruling No. 023-04

September 17, 2004 VAT RULING NO. 023-04 Sec. 109 (y) VAT-29-98 Philippine Institute for Development Studies NEDA sa Makati Building, 106 Amorsolo St. Legaspi Village, Makati City Attention: Mr. Mario B. Lamberte President Gentlemen : This refers to your letter dated March 25, 2004 requesting, in effect, for exemption from the payment of value-added tax on your sale of publication materials. It is represented that the Philippine Institute for Development Studies ("PIDS") is a non-stock, non-profit government corporation created by virtue of Presidential Decree (P.D.) No. 1201; that it conducts research on all aspects of the Philippine economy as requested by the government or its agencies; that in order to promote utilization of research results, it publishes books and other printed materials as follows: Publications Printing Interval Description Policy Notes (PN) Occasional The Policy Notes are observations/analyses written by PIDS researchers on certain policy issues. The treatise is holistic in approach and aims to provide useful inputs for decision making. The Notes are circulated to the highest levels of decision makers in the country. Development Bimonthly This publication highlights findings and Research News recommendations culled from PIDS- (DRN) sponsored research and fora. This newsletter also features special articles on key national and current issues as well as news on PIDS activities participated in by the staff, thereby providing an inside look at the people within the Institute. The main objective of the newsletter is to highlight policy-oriented but non-technical issues deemed relevant and timely. Philippine Journal of Twice a year Focuses on various aspects of Development (PJD) (semestral) development, particularly on the economy, business, public administration, foreign relations, sociology, political dynamics and other topics which have strong policy implications on Philippine concerns, in particular, and on overall development issues, in general. The Journal welcomes articles/studies on development concerns written by researchers and development practitioners both from the Institute and from the outside. Studies considered for inclusion in the Journal are original and reviewed by a set of referees. Research paper Occasional The Series is a formal publication meant to Series (RPS) promote research, stimulate discussion and encourage the use of study results conducted under the auspices of the Institute. Studies published under this Series have been reviewed by an internal publications review committee and by external referees. Studies are original and have not been published in any form and contain the rationale, framework, methodology, conclusions or recommendations and other relevant information. Books Occasional Books are the ultimate printing outlet of PIDS studies and cater to a broad-based audience or the general public. The books deal with various important policy concerns presented in a comprehensive and coherent manner. They include topics of great significance to the body of knowledge in a particular area of development. Economic Issue of Occasional The EID provides a definition of a specific the Day (EID) economic concept and illustrates its application and relation to everyday experiences and issues. The EID is meant to help in the education of the public on certain policy issues so that they may be better informed and able to participate in a more intelligent discussion of issues. that the target readers of these publications are policy makers, planners and key officials of the government, except for the EID which is targeted for a more broad-based audience; that about 9598% of the printed materials are given out as complimentary copies and only about 25% are sold to walk-in researchers; that the Institute would like to increase the ratio of sales of its publications by aggressively offering the same on consignment basis and possibly through on-line selling; and that it is estimated that the sales would not exceed the annual threshold of PhP550,000.00. HDITCS In reply, please be informed that Section 109(y) of the 1997 Tax Code provides, viz : "SEC. 109. Exempt Transactions . The following shall be exempt from the value-added tax: "xxx xxx xxx (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 . . ." In view of the foregoing, it is the opinion of this Office that only the sale; importation, printing or publication of your books and other printed materials which appear at regular intervals and subject to the limitation provided under Section 109(y) of the Tax Code of 1997 is exempt from VAT ( VAT Ruling No. 029-98 dated September 17, 1998 ). Moreover, the sale, printing or publication of the following publication materials that do not appear at regular intervals: Policy Notes, Research Paper Series and Economic Issue of the Day, the gross annual sales of which do not exceed the amount of five hundred fifty thousand pesos (PhP550,000.00) is subject to the 3% percentage tax on the gross quarterly sales thereof pursuant to Section 116 of the Tax Code of 1997. aSCHcA 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 as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group