BIR Ruling [DA-683-99]

December 10, 1999 BIR RULING [DA-683-99] Advanced Geotechnical Engineering Services 103 Dunhill Street, Fairview Park Subdivision East Fairview, Quezon City Attention: Mr . Richard C . Tan Proprietor Gentlemen : This refers to your letter dated October 11, 1999 seeking clarification as to the applicable withholding tax rate that should be deducted from all payments due your business. cdlex It is represented that Advanced Geotechnical Services is a single proprietorship duly registered with the Department of Trade and Industry; that you obtained and renewed your Quezon City Business Permit and License; that you are a contractor of geotechnical engineering services such as soil investigations and exploration, laboratory testing and pile testing since 1986; and that you likewise registered your business with the BIR as a contractor and is a value-added tax taxpayer and a withholding agent. In reply, please be informed that Section 2.57.2(E) of Revenue Regulations No. 2-98 provides that: "Sec. 2.57.2 Income payment subject to creditable withholding tax and rates prescribed thereon . Except as herein otherwise provided there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: (E) Income payments to certain contractors On gross payments to the following contractors, whether individual or corporate On percent (1%) (1) General engineering contractors Those whose principal contracting business in connection with fixed works requiring specialized engineering knowledge and skill including the following divisions or subjects: (a) Reclamation works; (b) Railroads; (c) Highways, streets and roads; (d) Tunnels; (e) Airport and airways; (f) Waste reduction plants; (g) Bridges, overpass, underpass and other similar works; (h) Pipelines and other systems for the transmission of petroleum and other liquid or gaseous substances; (i) Land leveling; (j) Excavating; (k) Trenching; (l) Paving; and (m) Surfacing work. Such being the case and considering that you are operating as a contractor of geotechnical engineering services income payments made to you shall be subject to a creditable expanded withholding tax at the rate of 1% pursuant to Section 2.57.2(E) of Revenue Regulations No. 2-98. (BIR Ruling No. DA-124-99 dated March 4, 1999) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)