VAT Ruling No. 047-03

November 25, 2003 VAT RULING NO. 047-03 Sec 109 (y) VAT Rlng 026-00 INFO-ED Marketing Corporation #2 Park Drive, Mintcor Townhomes West Service Road, Cupang Muntinlupa City 1700 Attention: Mr. Abelardo T. Leao Gentlemen : This refers to your letter dated October 8, 2001 requesting for a ruling as to whether or not the importation of journals and periodicals through the internet is exempt from VAT considering that the end-users are libraries. It is represented that you are engaged in the sale of educational materials such as books, CDs, software, etc.; that in connection with your request, said journals and periodicals can only be accessed by the librarians/students through the internet in their library; and that the client school does not have a hard copy (print format) of the journals. In reply, please be informed that pursuant to Section 109(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 VAT. Apparently, to be exempted from VAT, publication of said journals and periodicals must appear at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisements. The issue that may be raised, however, is whether or not the limited availability of said journals and periodicals in the internet and without the actual distribution and/or circulation of hard copy to the public may be considered as equivalent to written publication. R.A. No. 8792, also known as the "Electronic Commerce Act of 2000", sanctions and regulates transactions through the web, as well as recognizes the legality of messages and documents electronically written. A further perusal of said R. A. 8792 basically introduces the consummation of business transactions through the web with the use of electronic data message or electronic writing and digital signature. In this light, this Office is of the opinion that while journals and periodicals can be accessed only through the internet, they are basically print media. Absence of hard copy (print format) does not negate the fact that every electronic data message or document electronically written is capable of being sent, received, recorded, stored, downloaded, transmitted, retrieved and finally reduced into printed form. Such being the case, although the aforesaid journals and periodicals can be accessed only through the web, they are nonetheless considered written publications. ASHICc Accordingly, such importation of journals and periodicals which can be accessed only through the internet may be exempted from VAT as provided for under Section 109(y) of the Tax Code of 1997, if (1) their publication in the internet appears at regular intervals; (2) they are available for subscription and sale at fixed prices; and (3) they are not principally devoted to the publication of paid advertisements. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it shall be disclosed 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