BIR Ruling

July 20, 1976 The National Parks Development Committee Rizal Park P. O. Box 1671, Manila Attention: Mr . W . S . Schaare Gentlemen : This refers to your letter dated July 4, 1976 requesting exemption from the payment of the 3% contractor's tax. It is represented that you were contracted by the Civil Aeronautics Administration (CAA) to undertake the maintenance and general upkeep of the Manila International Airport and Domestic Terminal landscaped areas, grounds, fountain and music systems; that in consideration for your services, CAA will remit to you the amount of P55,000.00 a month; and that this arrangement covers a period starting from June 16, 1976 to December 16, 1976. In reply, I have the honor to inform you that under the above mentioned facts, even assuming that you are a government entity, you are still subject to the 3% contractor's tax imposed by Section 191 of the Tax Code. Section 1 of Republic Act No. 104 provides as follows: "All corporations, agencies or instrumentalities owned or controlled by the Government shall pay such duties, taxes, fees and other charges upon their transaction, business, industry, sale or income as are imposed by law upon individuals, associations or corporations engaged in any taxable business, industry, or activity, except on goods or commodities imported or purchased and sold or distributed for relief purposes as may be determined by the President of the Philippines." In view thereof, and since you are not exempt from the payment of the 3% contractor's tax, CAA shall withhold the tax from the amount being paid to you and remit the same to the Government, as required by Republic Act No. 1051. cdta Very truly yours, EFREN I . PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3