GPE Consultants & Company

March 24, 2008 BIR RULING [DA-191-08] RA 7227; DA-649-2004 GPE Consultants & Company 32 Cristine St., Parkway Village, SFDM, Quezon City Attention: Mr. Engracio P. De Gracia Managing Partner Gentlemen : This refers to your letter dated April 24, 2007 requesting for a revalidation of your tax exemption from withholding tax as a general professional partnership. It is represented that GPE Consultants & Company (formerly GPE Resource Consultants & Co.) was issued BIR Ruling No. DA-452-96 dated November 29, 1996; and that it amended its SEC Registration on May 3, 2000; and that the participation of Ms. Bethsaida S. Gomez as accountant of GPE Consultants & Company no longer exists since she is no longer connected with the firm since November 6, 2006. In reply, please be informed that pursuant to Section 26 of the Tax Code of 1997, as amended, general professional partnerships are not subject to income tax imposed under Chapter III, Title II of the Tax Code of 1997. However, persons engaged in the practice of their profession as partners in a general professional partnership shall be liable to income tax in their separate and individual capacities. Each partner shall report as gross income his distributive share, actually or constructively received, in the net income of the partnership. For purposes of computing the distributive share of the partners, the net income of the partnership shall be computed in the same manner as a corporation. ACEIac Moreover, general professional partnerships are exempt from the imposition of withholding tax under Revenue Regulations No. 2-98, as amended. However, it is worth mentioning that income payments made periodically or at the end of the taxable year by a professional partnership to the partners, such as drawings, advances, sharings, allowances, stipends and the like, are subject to the 10% creditable withholding tax pursuant to Section 2.57.2 (H) of RR No. 2-98, as amended. (BIR Ruling No. DA-091-99 dated February 15, 1999) This ruling is being issued on the basis of the foregoing facts as represented. If upon investigation, it will be discovered that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner