BIR Ruling

March 1, 1968 Mr. Robert S. Clark 2630 A. Bonifacio Street Makati, Rizal S i r : This refers to your letter dated February 15, 1968 stating that the Everclean Services is engaged in window cleaning, venetian blind cleaning, janitorial service and in floor maintenance service; that you do not believe that the 3% tax is imposed on your entire gross receipts derived therefrom; that the amount paid to you by your client consists of two parts, the salaries for the required number of men to perform a particular job, and that part which represents your fee; and that it is your belief that only the amount retained by you after paying the salaries of your employees should be your gross receipts subject to the 3% tax because the said amount which you received from clients for the payment of the salaries of your employees are paid in trust of said employees. You now request clarification as to the correct basis of the 3% Contractor's Tax. In reply thereto, I have the honor to inform you that inasmuch as you are a contractor, the entire amount which you received from your clients constitutes your gross receipts which is subject to the 3% tax prescribed by Section 191 of the Tax Code. Your contention that the amount which corresponds to the salaries of the employees is paid to you in trust by your clients and should be excluded from your gross receipt is without legal basis. adc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue