BIR Ruling

July 10, 1970 Mr. Celso A. Gonzales Treasurer Philippine Exchange Co., Inc. P. O. Box 1613, Manila S i r : This refers to your letter dated June 18, 1970 requesting clarification as to the implementation of Section 182(B) of the Tax Code, as amended by Republic Act No. 6110 insofar as the law affects professionals in the service of the government. In reply, I have the honor to inform you that professionals employed in the government service who use or exercise the knowledge of their profession in their employment are subject to the occupation tax imposed in Section 182(B) of the Tax Code, as amended. The application of the knowledge of their profession in the exercise of their duties and functions is considered practice of their profession, although such practice is limited to their employment. It should be noted that the former provision of Section 182(C)(7) of the Tax Code (quoted in your letter as answer to questionnaire 14 of the primer issued by the Tax Information Division of this Bureau) which exempted from the occupation tax persons employed in any branch of the service of the Government of the Philippines whose entire professional services are devoted exclusively thereto or are applied under its direction, has been eliminated by Republic Act No. 6110. Such elimination is sufficiently explicit and indicative of legislative intent to tax professionals in the employ of the Government. (BIR Ruling No. 70-008). However, professionals who are employed in the government service whose only source of income is their salaries are exempted from the requirement of keeping books of accounts required under Revenue Regulations No. V-1, as amended. However, teachers and professors who are not among those professionals enumerated in Section 182(B) of the Tax Code are not required to pay the occupation tax. cdt Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue