BIR Ruling

July 3, 1967 Mr. Remigio D. Sagles Supervising Revenue Examiner Special Investigation Division Thru: the Chief, Special Investigation Division B.I.R., Manila S i r : This refers to your letter dated June 29, 1967 stating that Mr. Piero Amberti, an Italian resident of the Philippines entered into several contracts with the Bureau of Public Works for materials and labor to finish the Quezon Mausoleum; that it is however specified in the contract that the Bureau of Public Works is the importer of the materials (marbles) and to pay all import duties and other charges if not exempted together with the machineries used by the contractor in cutting and polishing the imported marbles; that the participation of Mr. Amberti in the importation is that he gave the quotation to the Bureau of Public Works of the cost of marble to be imported in Italy; that incidentally, Mr. Amberti's firm was the exporter of the marble and granite in Italy; that when the marbles and the cutting tools arrived in the Philippines, it was Mr. Amberti who installed the said marbles in the Quezon Mausoleum as specified also in the contracts where there is a certain amount said contract specified for the cost of labor; and that only the cost of labor was paid to Mr. Amberti in the Philippines and the cost of materials was paid in Italy through a letter of credit. LibLex You now ask information whether under the foregoing facts, the 3% contractor's tax should be based on the total cost of labor and materials or on the total cost of labor alone. In reply, please be informed that the 3% contractor's tax prescribed in Section 191 of the Tax Code should only be based on the total cost of labor, it appearing that the contractee, the Bureau of Public Works supplied the materials used in the particular job. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue