VAT Ruling No. 042-92

March 26, 1992 VAT RULING NO. 042-92 NIRC Sec. 102 Precedent Ruling 000-00 Executive Editors, Inc. 107 Peninsula Court Building Paseo de Roxas cor. Makati Ave. Makati, Metro Manila Attention: Mr. Joaquin S. Lim President S i r s : This refers to your letter dated October 4, 1991 stating that Executive Editors, Inc. is a newly established firm engaged in consultancy services to corporate publications; that in connection with its main business, it is planning to publish monthly newsletters on various business and management subjects, such as customer service, productivity and quality, salesmanship and human resource development, which will be for sale to client-corporations at a subscription rate of P865 per year; and that said newsletters do not contain any advertisements but shall merely support themselves through circulation and intended for export. In connection thereto, you now request confirmation of the exemption from value-added tax of your proposed publication of said newsletters under Section 103(f) of the National Internal Revenue Code (NIRC), which exempts the transaction of printing, publication, importation or sale 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 advertisements. In reply thereto, please be informed that the printing and publication activities exempted from VAT pursuant to Sec. 103(f) of the Tax Code, as amended, pertain to those which are basically intended for the publication of public news. Since your publication of newsletter is an incidental endeavor to your main business of corporate consultancy, meaning such is deliberately utilized as a medium to exclusively render consultancy services in the form of printed ideas to client-corporations in need of technical, managerial and/or technical informations on subject matters mentioned above, said provision of the Tax Code cannot be invoked in your claim for VAT exemption. Such being the case, as a company principally engaged in consultancy services, the Executive Editors, Inc. shall be subject to 10% VAT on its publication of newsletters, whether sold/subscribed locally or abroad, pursuant to Section 102 of the National Internal Revenue Code (NIRC), as amended. (Note: Only goods are subject to export sales) Executive Editors should register for VAT purposes in accordance with Section 107 of the same Code. Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue