BIR Ruling

August 17, 1971 Mr. Ernesto N. Padre Corporate Auditor National Irrigation Administration Quezon City S i r : This refers to your letter dated July 14, 1971, requesting information as to whether or not the services rendered by Sanyu Consultants International, Inc. of Japan per contract with the National Irrigation Administration for the construction of the Cotabato Irrigation Project is subject to the contractor's tax. acd In reply, I have the honor to inform you that a perusal of the contract entered into by and between the National Irrigation Administration and the Sanyu Consultants International, Inc. of Japan shows that the latter will perform consulting engineering services and render engineering supervision of the construction of the Cotabato Irrigation Project. Such being the case, the Sanyu Consultants International, Inc. is subject to the 3% contractor's tax on its gross receipts which consist of direct salaries, consultant's fees, overhead allowance, per diems, travel expenses, actual cost and unallocated cost pursuant to Section 191 of the Tax Code. And as the foregoing receipts are subject to the 3% contractor's tax, you are required to withhold the aforesaid tax on all payments made to the contractor in accordance with the provisions of Republic Act No. 1051, as implemented by Revenue Regulations No. 21-67, dated May 2, 1967. cdta Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue