BIR Ruling No. 268-2021

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City

Section 8 of Republic Act (RA) No) 8436, as amended by Section 12 of RA No. 9369 BIR Ruling Nos. 390-2015

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Holy Family Printing Corporation 27. Congressional Avenue Extension Tandang Sora. Quezon City

Attention: LEOPOLDO M.GOMEZ

President

Gentlemen:

This refers to your letter dated January 22. 2021. requesting for confirmation of your opinion that Hoty Family Printing Corporation (HFPC) is exempt from husiness tax pursuant to RA No. 8436. as amended by RA No. 9369.

Documents submitted show that HFPC. with Taxpayer Identification Numher (TIN) 000-

Commission under Registration No. is a domestic corporation duly registered with the Securities and Exchange that it is primarily engaged in commercial printing services for any person or office, private or public and as principal or agent to carry on the business as printer for newspaper. journals. magazines. books and literary works and undertakings: that on October 04, 2018. HFPC entered into a Joint Venture Agreement (JVA) with the Nationa! Printing Office (NPO). primarily for the purpose of printing tasks and works that may be described in the Single Task Order Contracts: that NPO shall be primarily and exclusively responsible for marketing and client relationships: that under the JVA. NPO and HFPC shall divide. share-and. share-alike. the net revenue derived from the works described in the Single Task Order ('ontract:

printers. equipment. facilities. space and manpower. for printing of Official Ballots and Other and that on December 05. 2018. NPO entered into a Memorandum of Agreement with the Commission on Elections (COMELEC) for the purpose of providing printing services. including

Accountable Forms for the National and Local Election with strict compliance with the design specifications provided by the COMELFC. Hence, this request.

In reply. please he informed that Section 12 of Republic Act (RA) No. 9369. amending Section 8 of RA 8436. provides as follows:

SE(TION I2 Procurement of Equipment and vaterials. To achiere the purpose of this Act. the Commission is outhorized to proeure. in accordaneet with existing laws. hy purchase. leuse. rent or other forms of acyuisitiom supplies. eyuipment. muteriats. sofhvare. focilities und other servies. from local

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or foreign sources free from taxes and import duties, subject to accounting and auditing rules and regulations. With respect to the May 10. 2010 elections and succeeding electoral exercises, the system procured must have demonstrated capabilit and heen successfully used in a prior electoral exercise here or abroad. Participation in the 2007 pilot exercise shall not he conclusive of the System's fitness. (Emphasis supplied)

It must be noted that the twelve percent (12%) VAT or the three percent (3%) percentage tax, whichever is applicable, is a tax on the business transaction or activity and is an indirect tax which the seller of goods or services may pass-on or shift to the customer/purchaser who ultimately bears or assumes the burden of the tax.

COMELEC from the 12% VAT or the 3% percentage tax on its local purchases of goods and Section 12 of RA No. 8436. as amended by RA No. 9369, clearly intended to exempt

services as well as importation of goods that will be used relative to the conduct of the May lo. 2010 elections and succeeding electoral exercises. Hence. the suppliers/sellers of goods and latter's purchases of goods and services that will be used in the elections. (BIR Ruling No. 390- services to COMELEC cannot shift or pass on any VAT or percentage tax to COMELEC on the

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to the latter's purchases and other contractual arrangements. Imay only be invoked by COMELEC and it does not extend to COMEIEC's suppliers with respect services that will be used in the conduct of automated national and local elections, such exeinption While we confirm that COMELEC is exempt from VAT on its purchase of goods and

their cost or expense. be considered as the end-user who will bear or assume the burden of the tax (VAT or Percentage allowed as credit against the output tax on the part of the supplier but shou!d he treated as part of tax). Accordingly, the input tax attributable to VAT-exempt sales to COMELEC shall not be Thus, NPO. HFPC or the Joint Venture is not entitled to the said tax exemption but shall

upon investigation. it will be ascertained 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. However. if

Very truly yours.

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Commissioner of Internal Revenue CAESAR R. DULA

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