The purchase and importation of books will remain tax-exempt under the second tax reform package of the Duterte administration, a top official of the Finance Department said.
Finance Undersecretary Karl Kendrick Chua said in a news forum the value-added tax exemption of books would remain as provided for under the National Internal Revenue Code, along with its importation as stated under the Customs Modernization and Tariff Act.
Chua said the Philippines would continue to abide by the provisions of the Florence Agreement, a 1950 United Nations treaty where 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 Aug. 7, 1979.
The second package of the Duterte administration’s comprehensive tax reform program aims to reduce the corporate income tax rate and reform the convoluted system of incentives given to businesses.
Package 2 also aims to attract more investments, create more jobs and level the playing field for micro, small and medium enterprises that are currently unable to compete with multinational companies receiving numerous and hefty tax incentives.
“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,” Chua said.
“Second, the importation exemption under the Customs Modernization and Tariff Act, we also did not touch that,” he said.
Chua said the only provision pertaining to the book industry under House Bill No. 8083, or the Tax Reform for Attracting Better and High-quality Opportunities or Trabaho bill, involved the repeal of the tax provision under Republic Act No. 8047 after two years from the effectivity of the law.
RA 8047 is also known as the “Book Publishing Industry Development Act”.
Chua said the inclusion of the book publishing industry in the Trabaho bill’s repeal clauses would not mean that the VAT- and duty-free importation of books would be removed.
“The book publishing industry will be included in the Strategic Investment Priority Plan after an evaluation process. And in my view, this is among the sectors that has a great chance of being included in the SIPP,” Chua said.
Chua said if included in the SIPP, the book industry could even enjoy more incentives under the proposed single menu of incentives in the Tax Code.