THE Department of Finance (DOF) has clarified that the purchase and importation of books will remain value-added tax (VAT) exempt under the second tax-reform package of the Duterte administration.
Finance Undersecretary Karl Kendrick T. Chua said the VAT exemption of books will remain as provided under the National Internal Revenue Code along with its importation as stated under the Customs Modernization and Tariff Act (CMTA).
He assured the public that the Philippines will continue to abide by the provisions of the Florence Agreement, a 1950 United Nations (UN) treaty in which the signatory-states agreed not to impose customs duties on the importation of certain educational, scientific and cultural materials, including books. The Philippines signed the agreement on August 7, 1979.
Package 2 of the Duterte administration’s Comprehensive Tax Reform Program (CTRP) aims to reduce the corporate income-tax (CIT) rate, and rationalize fiscal incentives given to businesses.
“First, under the tax code, the exemption of the purchase of books, we did not touch that. If you buy a book from a bookstore, it will still be VAT-exempt. Second, the importation exemption under the CMTA, we also did not touch that,” Chua said.
According to the DOF, the only provision pertaining to the book industry under House Bill 8083, or the “Tax Reform for Attracting Better and High-quality Opportunities” bill, involves the repeal of the tax provision under Republic Act 8047, or the “Book Publishing Industry Development Act” after two years from the effectivity of the law.
“The book publishing industry will be included in the Strategic Investment Priority Plan [SIPP] after an evaluation process. And in my view, this is among the sectors that has a great chance of being included in the SIPP,” he added.
Senate consensus
Earlier, several senators signaled support for an emerging majority consensus for Congress to reject removal of the existing VAT exemption on books and publications as part of the second-round reforms.
Senate President Vicente C. Sotto III told the BusinessMirror on Monday that he won’t allow such a move, affirming the Senate leadership’s position when asked about the DOF-backed proposal to impose the VAT on instructional materials as part of the second package of the CTRP.
Sotto earlier introduced Senate Bill 1906, the chamber’s version of the DOF-endorsed initiatives on reducing corporate income taxes, as well as rationalizing fiscal incentives. Included here is the VAT exemption for books and publications.