VAT Ruling No. 055-02

September 12, 2002 VAT RULING NO. 055-02 Section 109 (y) VAT Ruling No. 022-2000 Book Media Press, Inc. 21-E Boni Serrano Avenue, Quezon City Attention: Mr. Benito Javierto Brizuela President Gentlemen : This refers to your letter dated March 18, 2002 requesting for an exemption from the Value Added Tax pursuant to the provisions of Section 109 (y) of the Tax Code of 1997. It is represented that your company is a registered member of the National Book Development Board (NBDB) with Certification of Registration No. 2001-0324 as an accredited book printer and book publisher; that on September 2001, the Department of Education (DepEd) awarded you a contract amounting to Php13,781,252.99 for the printing and delivery of textbooks and teachers' manuals under the Social Expenditure Management Project (SEMP) covered by contract No. 01-2Zs-SEMP-2000-TX/TM; and that as a registered member of NBDB and as accredited printer of the Department of Education, you are exempted from the VAT being imposed by the DepEd as mentioned in Rule VIII Section 3 of RA No. 8047 (otherwise known as the Book Publishing Industry Development Act); that the DepEd initially deducted 3% VAT in the amount of Php103,359.40. In reply, please be informed that Section 109, par. (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 the imposition of the Value Added Tax. As such, regardless of the amount of the said transaction, you will not be subject to the VAT and consequently from the creditable VAT, since the transaction is between you and the DepEd. Neither will you be required to pay the 3% percentage tax under Section 116, in relation to Section 109(z) of the same Code. In view thereof, your business of publishing and selling of books is exempt from the payment of the Value Added Tax/Creditable Value Added Tax and from the 3% percentage tax. However, if you have other transactions (such as the printing of brochures), which are subject to the Value Added Tax, you will also be required to register your business as a VAT business entity and issue a separate VAT invoice/receipt to record such transactions. This ruling is being issued on the basis of the foregoing facts as represented. If upon investigation, it will be discovered that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group