BIR Ruling

November 16, 1977 Mr. H. P. Paulin H. P. Paulin Ever-Ready Service Rm. 200 Roman Santos Bldg. Manila S i r : This refers to your letter dated July 1, 1977 requesting an opinion as to whether or not the P60.00 allowance required to be given to employees by PD No. 1123 but which you collect from companies with which you perform janitorial services forms part of the gross receipts of your firm in the computation of the 3% contractor's tax prescribed by Section 191 of the Tax Code. The term "gross receipts" as used in the abovecited section, means the actual amount received by a contractor for the services rendered by him without any deduction (BIR Ruling dated March 16, 1962). When you are able to collect from the company with which you are performing janitorial services the allowance of P60.00 of your employees, such additional collection is but a recognition on the part of the contractee of the increased burden your company must shoulder so as to comply with PD No. 1123. The amount representing the said allowance you collect from the contractee companies is considered as the increase of the contract price of the work done, not as payment of the living allowance. Living allowance may be passed on to clients or to contractee-companies but the fact remains that such allowance under PD No. 1123 is your liability as employer. Accordingly, the gross receipts of your janitorial firm for purposes of the 3% contractor's tax is the whole amount received from your clients, including the P60.00 allowance collected from them. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8