BIR Ruling

February 24, 1976 Sotero T. Segui & Co. Certified Public Accountants 10 North Lawin Avenue Quezon City Attention: Mr . Sotero T . Segui Gentlemen : This refers to your letter dated January 14, 1976 requesting information whether the 3% contractor's tax is collectible in the following instances: aisadc (1) A corporation helping in the management of another corporation receives a regular fixed monthly retainer fee plus a certain percentage yearly from the net income. (2) A corporation which is engaged in the preparation of project feasibility study of another corporation. In reply, you are advised that the corporations in both instances are subject to the 3% contractor's tax, pursuant to Section 191 of the Tax Code as amended by Presidential Decree No. 69, which imposes said tax on all persons whose activity consists essentially of the sale of all kinds of services for a fee, regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractor or their employees. And as the corporations are considered contractors within the purview of the aforecited law, they are also subject to the annual fixed tax of P50.00 prescribed in Section 182(a)(1) of the same Code. cdt Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."