" , 
.i enat, 
I:"' 
SIXTEENTH CONGRESS OF THE 
) 
~ff.~r "f!~d;'mtart' 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
'13 
AUG 13 P6 :15 
S. No. 
1280 
T
'" 
I 
" 
REef. J"', n HY: 
(, 
SENATE 
Introduced by Senator Ralph G. Recto 
Explanatory Note 
Northrop Frye, a famous Canadian literary critic and theorist once said, "The most 
technologically efficient machine that man has ever invented is the book." 
Frye's quote still holds true to this day. Books and other useful reading materials 
contribute to a person's intellectnal development and imagination. 
However, not much has been introduced to the print books since it was first officially 
printed more than 500 years ago using Johannes Gutenberg's movable type printing press, until 
40 years ago, when Michael Hart, founder of Project Gutenberg, started "digitizing" cultural 
works including books which later became known as e-books. E-books are basically books 
composed in or converted to digital format for display on a computer screen or handheld 
device. l 
Recently, there have been dramatic changes in the world of consumer electronics with 
the introduction of the latest generation gadgets such as digital books, e-readers, smart phones 
and tablets. Thus, it would only be a matter of time 'before learning institutions in the country 
start to require their students to bring the latest electronic technology to class. Not only are they 
handy, eco-friendly and space-saving but also, these gadgets will make it easier for students to 
take down notes and at the same time download books and other useful reading materials from 
the Internet. Unfortunately, students might find it more expensive to download e-books than 
. buying its printed format since the former is not VAT-exempt. 
At present, our Tax Code under Section 109 (I) includes the sale, importation, printing 
or publication of books and any newspaper, magazine, review or bulletin as exempt from the 
coverage of the value-added tax 01 AT). Exemption from VAT makes books more affordable 
and more accessible to the public most especially to the students and researchers. However, at 
the time the V AT Reform Act of 2005 was enacted, e-books and other digitally formatted 
reading and learning materials were not yet used prevalently and only a handful of electronic 
devices were capable of reading or displaying e-books. Hence, they were not included in the 
list of VAT-exempt items. Moreover, the Bureau of Internal Revenue issued BIR Ruling No. 
244-2012 stating that the sale of e-books and other electronically formatted versions of books 
are subject to VAT since it is not one of those listed under Section 109 (I) of the Tax Code. 
1 Merriam-Webster 


Guided by the principle that laws must reflect the changing 
countless benefits that e-books will provide the students and researchers in this country, the 
proposed Bill seeks to exempt books, newspapers, magazines, journaht'3re_',t~i~d 
other educational or learning materials made or published in digital or eJectrolllc format' (rom 
value-added tax. 
/aim 
4i' 
In view of the foregoing considerations, approy~l of this bill ~~!U:iie~IY 'So!lg1it>.-. --
TO 
• 
>1 I' 


SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
'13 
AUG 13 P6 :15 
SENATE 
S.No. 1280 
Introduced by Senator Ralph G. Recto 
AN ACT 
EXEMPTING BOOKS. NEWSPAPERS. MAGAZINES. JOURNALS. REVIEWS. 
BULLETINS AND OTHER EDUCATIONAL OR LEARNING MATERIALS MADE OR 
PUBLISHED IN DIGITAL OR ELECTRONIC FORMAT FROM VALUE-ADDED 
TAX, AMENDING FOR THE PURPOSE SECTION 109 (1) OF THE NATIONAL 
INTERNAL REVENUE CODE OF 1997. AS AMENDED 
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled: 
1 
SECTION 1. Section 109 (1) of the National Internal Revenue Code of 1997, as 
2 
amended is hereby further amended to read as follows: 
3 
"SEC. 109. Exempt Transactions. -
4 
(1) Subject to the provisions of Subsection (2) hereof, the following 
5 
transactions shall be exempt from the value-added tax: 
6 
"(A) xxx; 
7 
"xxx 
8 
"(R) Sale, importation, printing or'lmblication of books and any 
9 
newspaper, magazine, review or bulletin which appears at regular 
10 
intervals with fixed prices for subscription and sale and which is 
11 
not devoted principally to the publication of paid advertisements; 
12 
"(S) SALE OF BOOKS, NEWSPAPERS. MAGAZINES, 
13 
JOURNALS, REVIEWS, BULLETINS AND OTHER 
14 
EDUCATIONAL OR LEARNING MATERIALS MADE OR 
15 
PUBLISHED IN DIGITAL OR ELECTRONIC FORMAT; 
, 16 
"(TIS]) xxx; 
17 
"(UIT)) xxx; 
18 
"(VIUl) xxx; 
19 
"WIVl) xxx; and 
20 
"XIWl) xxx. 
21 
"xxx." 
22 
SEC. 2. Implementing Rules and Regulations. - The Secretary of Finance, shall, upon 
23 
the recommendation of the Commissioner ofInternal Revenue, promulgate not later than thirty 


c 
c 
c 
c 
co 
< 
1 
(30) days upon the effectivity of this Act the necessary rules and regulations for its effective 
2 
implementation. 
3 
SEC. 3. Repealing Clause. - All laws, acts, presidential decrees, executive orders, 
4 
issuances, presidential proclamations, rules and regulations or parts thereof which are contrary 
5 
to and inconsistent with any provision of this Act ~re hereby repealed, amended or modified 
6 
accordingly. 
7 
SEC. 4. Effectivity. - This Act shall take effect fifteen (15) days after its complete 
8 
publication either in the Official G37..ette, or in at least two (2) newspapers of general circulation. 
Approved, 
" ,-