VAT Ruling No. 026-00

August 21, 2000 VAT RULING NO. 026-00 109 (y) 103 (y) 006-98 Info-Ed Marketing Corp . 6 Anthony St., JPA Subd. Tunasan, Muntinlupa City Attention: Mr . Abelardo T . Leano President Gentlemen : This refers to your letter dated February 24, 2000 inquiring whether your sale, importation and distribution of educational materials and equipment, such as books, videos, CDs and the like to private and public educational institutions will be VAT exempt under the NIRC. In reply, please be advised of the following: As a general rule, the sale of educational materials and equipments to private and public educational institutions is subject to the Value-Added Tax under the National Internal Revenue Code (NIRC). However, your sale, importation, printing and 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 for VAT under Sec. 109 par.(y) of the same Code. Moreover, if your gross sales and/or receipts from your sale of educational materials and equipment other than those items which are originally VAT exempt under Sec. 109 of the NIRC, do not exceed the amount of Five hundred fifty thousand pesos (P550,000) during the taxable year shall, in lieu of the Value-Added Tax, be subjected to the 3% percentage tax on gross sales or receipts under Section 116 of the same Code. HTSaEC Based on the above, you have to be a VAT-registered business entity if from your projection, your gross sales/receipts from educational equipment other than books during the year exceed P550,000. Moreover, since you will also be engage in VAT exempt transactions (i.e., sale of books), you will also be required to keep a separate non-VAT invoice/receipt to record the sale of exempt transactions to prevent such transactions from being Vatable. Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group