VAT Ruling No. 047-99

April 12, 1999 VAT RULING NO. 047-99 Sec. 109 (q) 53-90 047-99 Eugenio Lopez Foundation, Inc . ABS-CBN Complex Mother Ignacia Avenue Quezon City Attention: Dr . Serafin D . Quiason Consultant Gentlemen : This refers to your letter dated February 8, 1999 requesting for exemption from the value-added tax on your importation of forty (40) Microfilm Rolls, on the Philippine Insurgent Records, 1891 to 1901..IS M254, covered by the Commercial Invoice of the National Archives Trust Fund (NWCPI), 8601 Adelphi Road, Room B-8101, College Park, M.D. dated 22 December 1998, with HAWB No. 801136778031 of the FEDERAL EXPRESS (FEDEX) coming from the National Archives, U.S.A. It is represented that the EUGENIO LOPEZ FOUNDATION, Inc. is a duly incorporated non-stock and non-profit domestic corporation; a non-vat registered person with TIN 000-863-991-001; that the said microfilms are for the Philippine Insurgent Records, with no commercial value and is intended for research and archival purposes; that the United Nations Educational, Scientific and Cultural Organization (UNESCO) has issued a certification dated 07 January 1999 that under the provisions of the UNESCO Florence Agreement to which the Philippines is a signatory, the same is classified as "Films" under Annex C(1) thereof, on the importation of educational, scientific and cultural materials. In reply, please be informed that in VAT Ruling No. 060-97 dated September 30, 1997, it was ruled that the term "book" for purposes of the VAT law only applies to printed matters in hard copy. It does not, however, apply to electronic copy of any book or publication. as follows: "CD-ROM comes within the purview of the "goods or properties", hence, the sale thereof made in the course of trade or business of the seller is subject to VAT pursuant to Section 99 in relation to Section 100 of the aforesaid NIRC. An electronic copy of any publication does not come within the purview of the terms "books, newspapers, periodicals, magazine, review or bulletin" for the purpose of VAT exemption as provided under Section 103(y) of the aforesaid NIRC. The said terms only apply to printed matters in hard copy as expressly provided therein. The term "book" has been defines as "A literary composition which is printed; a printed composition bound in volume." (Scoville V Toland 21 Fed. Cas. 864 BLACK'S LAW DICTIONARY)" Accordingly, it does not come within the purview of the VAT exemption provided under Section 109 (y), NIRC as amended by RA 8241, and as renumbered by R.A. 8424, as follows: "(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" ARTICLE III of the UNESCO Florence Agreement of November 22, 1950, which was ratified by Philippine Senate on May 2, 1952 and became effective and binding to the Philippine Government on August 30, 1952, provides: "1. The contracting States undertake to give every possible facility to the importation of educational scientific or cultural materials, which are imported exclusively for showing at a public exhibition approved by the competent authorities of the importing country and for subsequent re-exportation . These facilities shall include the granting of the necessary licenses and exemption from customs duties and internal taxes and charges of all kinds payable on importation other than fees and charges corresponding to the approximate cost of services rendered. 2. Nothing in this article shall prevent the authorities of an importing country from taking such steps as may be necessary to ensure that the materials in question shall be re-exported at the close of their exhibition." It will be observed that the exemption availing under the said agreement is only limited to importation exclusively intended for showing at a public exhibition and for subsequent re-exportation. The said requisites, however, are not availing in your case because the subject importation shall not be re-exported. Since the subject importation does not come within the purview of the term "books or any similar publication" for purposes of Section 109 (y) of the Code (supra), hence not embraced by the VAT exemption under the said law, and considering that the aforesaid international agreement may not also legally be relied upon to exempt the same from imposition of the VAT, it follows that there is no existing law or international agreement to justify its exemption from the value-added tax. llcd Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue