BIR Ruling No. 331-2016

REPUBLICOFTHEPHILIPPINES

DEPAR MENTOFFINANCE BUREAUOCINTERNAL REVENUE

Quezon City

Sec.1091R of the Tax Code of

B[R Ruling No. 382-13 1997.as amended

#331-2016

6-29-2016

HYDN Publishing 28 Arayat corner Bulusan St. Brgy.Malamig.Mandaluyong City

Attention: Mr.HAYDEN U.AZUL

Proprietor

Gentlemen:

This refers to your letter dated September 3.2010 requesting for a VAT exemption certificate pursuant to the provisions of Section 109 (1(R) of the Tax

Code of 1997.as amended.

It is represented that HYDN Publishing located at No. 28 Arayat Cor

Bulusan Malamig.Mandaluyong City is engaged primarily in the publishing of any

educational materials.pamphlets.journals,reviewers and any other reading materials

Elements. English. Math. Filipino. Literary works and undertakings and other like World Map. Philippine Map.Science Laboratory Apparatus, Chemical

business similar or analogous to the foregoing: and that it is duly registered with Taxpayer's Identification No.

In reply.please be informed that under Section 1091R of the 1997Tax Code. as amended, it is provided that 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, shall be exempt from the imposition ofVAT.

Revenue Regulations (RRNo.16-2005 dated September 1.2005.to wit The above provision is being implemented by Section 4.109-1 (B(1(r) of

"Section 4.109-1. VAT' Exempt Transactions.

XXX XXX XXX

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Page 2 of 3 HYDN Publishing 3312016 6-292016

(BSubject to the provisions of Section +.109.2 hereof.the

following transactions shall be exempt from YAT

XXX XXX XXX

Sale. imporiation printing or publication of hooks und any

newspuper,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:"

In Revenue Memorandum Circular (RMC No.75-2012 dated November 22 2012. this Office made a clarification on the VAT exemption granted under Section

1091Rof the 1997Tax Code,as amended.to wit

I A newspaper, magazine,review or bulletin must he:(1) printed or published at regular intervals: (2) available for subseription and sale at fixed prices; and (3) are not principally devoted to the

publication of paid advertisements.

2 The terms "book""newspaper""magazine""review and "bulletin"as used in the provision refer to printed materials in

hard copies. They do not include those in digital or electronic format

or computerized versions. including but not limited to: e-books. e-

journals.electronic copies.online library sources.CDs and software.

Based on the foregoing, there are four (4 activities that are exempt from thc coverage of VAT,i.e.1 sale;2importation;3 printingand 4publication.of

books, newspapers, magazines. reviews and bulletins. Moreover.there are certain

magazine, review or bulletin must be:(1) printed or published at regular intervals 2 available for subscription and sale at fixed prices:(3 are not principally devoted requirements that have to be met under the above provisions, to wit: the newspaper. to the publication of paid advertisements; and (4 printed in hard copies. The

concurrence of the aforesaid requirements must be present in order that the sale. importation.printing and publication of books.newspapers.magazines.reviews and bulletins will be exempt from the imposition of VAT.

In view thereof, HYDN Publishing's publication distribution and sale of textbooks.in hard copies.are exempt from the payment of VAT and from the 3%

percentage tax under Section 116,in relation to Section 1091(Vof the 1997 Ta Code.(BIR Ruling No.382-13 dated October22.2013

as the publication,distribution and sale of materials other than books.newspapers. magazines.reviews and bulletins. said transactions are subject to VAT. and the issuc a separate VAT invoice/receipt therefor to record the same. taxpayer shall be required to register its business as VAT business entity and must However.if HYDN Publishing is engaged in other non-exempt activities such

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of goods. However. being an indirect tax. it can be shifted or passed on to the buyer/purchaser. transferee or lessee of the goods, properties or services. Once shifted to the buyer/customer as an addition to the cost of goods or services sold. it is no longer a tax but an additional cost which the buyer/customer has to pay in order to obtain the goods or services. Thus.the shifting of the VAT to HYDN Publishing does not make it the person directly liable and therefore. it cannot invoke its tax Moreover, VAT is an indirect tax payable by the seller and not the purchaser

to avoid the passing on or shifting of the VAT. Hence,notwithstanding that HYDN Publishing is a publication company, its purchases of goods. properties or services from its suppliers shall nevertheless be subject to the 12% VAT pursuant to Section exemption privilege under Section 1091(R of the Tax Code of 1997.as amended 107 of the same Code.

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.

Commissioner of Internal Revenue KIM S.JACINTO-HENARES

K-1-JRC W 042347

JU 21 Z01S