BIR Ruling No. 5-2018

BUREAU OF INTERNAL,REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE

Sec. 109 (1) (R) of the Tax Code of 1997, as amended

BIR Ruling No. 421-13 BIR Ruling No. 102-14;

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513 J. Marzan Street, Barangay 448, Zone 44, Sampaloc, Manila 1008 MGO Enterprises

Attention : Marissa G. Olle

Gentlemen: Proprietress

Ruling No. 083-2014 in connection with the sale of publication materials, like textbooks, workbooks and other educational materials. This refers to your letter dated April 6, 2015 requesting for renewal of BIR

registered with the Department of Trade and Industry (DTI) under Certificate No. to BIR Ruling No. 083-2014 dated March 4, 2014, MGO Enterprises' sale of books garden tools, agricultural supplies and equipment, and marine products; that pursuant are exempt from the payment of VAT and from the 3% percentage tax under Section April 30, 2017. 116, in relation to Section 109 (V) of the 1997 Tax Code; and that National Book Development Board (NDBD) Certificate of Registration No. It is represented that MGO Enterprises (TIN as a retailer of books, school and office supplies, instruction materials. is valid until is duly

documents: In support of its request, MGO Enterprises submitted the following

1. BIR Certificate of Registration:

2 3 Certified true copy of NBDB Certificate of Registration No. BIR Ruling No. 083-2014 dated March 4, 2014;

covering the following classification:

a. Book and/or E-Book Seller (Retail/Wholesale);

b.Book Printer; and c.Book and/or E-Book Publisher

In reply, please be informed that under Section 109 (1) (R) of the 1997 Tax

Code, as amended, the "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 VAT. "

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16-2005. Section 4.109-1 (B) (r) thereof, provides that - The above provision is being implemented by Revenue Regulations (RR) No.

newspaper, magazine, review, or bulletin which appears at regular devoted principally to the publication of paid advertisements; " "(r) Sale, importation, printing or publication of books and any intervals with fixed prices for subscription and sale and which is not

shall be exempt from VAT.

activities that are exempt from the coverage of VAT, i.e., sale, importation, printing and publication of books, newspapers, magazines, reviews and bulletins. Moreover, the features of the said items, like magazine, should appear at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisements. (BIR Ruling No. 102-14 dated March 25, 2014) Prescinding from the above-cited provisions, it is clear that there are four (4)

a printed composition bound in volume." (Scoville V Toland 21 Fed. Cas. 864 Black's Law Dictionary) The term "book" has been defined as "a literary composition which is printed:

Nations Educational Scientific and Cultural Organization (UNESCO), is a printed non-periodical publication of at least forty-eight (48) pages, exclusive of cover pages, "Book Publishing Industry Development Act", "Book" as defined by the United published in the country and made available to the public. (BIR Ruling No. 421-13 Moreover, under Section 3 (a) of Republic Act (RA) No. 8047 known as the

dated November 14, 2013)

books, which meet the above quoted statutory requirement of RA No. 8047, i.e., at Applying the foregoing, MGO Enterprises' sale, printing and publishing of

least forty-eight (48) pages, is qualified for exemption from VAT and from the 3% percentage tax under Section 116, in relation to Section 109 (1)(V) of the 1997 Tax Code, as amended. However, the sale of other materials not mentioned on Section 109 (1)(R) of the same Code is subject to VAT and taxpayer shall be required to register its business as VAT business entity and must issue a separate VAT invoice/receipt

therefor to record the same.

With regard to the sale and publishing of non-print information materials and

electronically printed materials, such as electronic books, this Office had the occasion

to rule in BIR Ruling No. 340-2011 dated September 7, 2011, that the term "book" for

purposes of the VAT law only applies to printed matters in hard copy. It does not

apply to electronic copy of any book or publication, thus:

"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 W

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provided under Section 103(y) of the aforesaid NIRC. The said terms only a printed composition bound in volume." (Scoville V Toland 21 Fed. Cas. apply to printed matters in hard copy as expressly provided therein. The term "book" has been defined as "A literary composition which is printed; 864 BLACK'S LAW DICTIONARY)

does not come within the purview of the VAT exemption provided under Section 109 (y), NIRC, as amended by RA No. 8241, and as renumbered by R.A. No. 8424 (now Sec. 109 (1)(R) of the 1997 Tax Code), as follows: Accordingly, electronic copy of any book or publication, such as in CD-ROM

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. " (y)Sale, importation, printing or publication of books and any

materials, electronic copies of books and other instructional materials by MGO Enterprises, being outside the purview of the term "books or any similar publication" for purposes of Section 109 (1)(R) of the 1997 Tax Code, are subject to the 12% VAT invoice/receipt therefor to record such transactions. (BIR Ruling No. 102-14 VAT. Thus, it is required to continue as a VAT business entity and issue a separate dated March 25, 2014) In view of the foregoing, the sale and publishing of non-print information

However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented.

Very truly yours,

K-1-ASB Commissioner of Internal Revenue a awa CAESAR R.DULAY 012509