G & W Architects Engineers Project Development Consultants

May 21, 2010 BIR RULING [DA-(C-014) 070-10] Sec. 26; 22 (B); RR 14-2002; DA-260-98; DA-235-2003; DA-(C-058)197-08 G & W Architects Engineers Project Development Consultants 10th Floor, Strata 2000 Building, F. Ortigas Jr. Ave. Ortigas Center, Pasig City Attention: Mr. Richard M. Garcia Senior Associate/Division Head Gentlemen : This refers to your letter dated February 23, 2010 requesting for a ruling that G & W Architects Engineers Project Development Consultants ("G & W" for brevity) is exempt from income tax and consequently to withholding tax for being a general professional partnership formed, organized and existing under the laws of the Philippines with Securities and Exchange Commission (SEC) Registration No. P-33015. DTIaCS In reply thereto, 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 engaging in the practice of their profession as partners in a general professional partnership shall be liable for 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. 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 general 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 Revenue Regulations No. 2-98, as amended. (BIR Ruling Nos. DA-260-98 dated June 22, 1998 and DA-091-99 dated February 15, 1999) SaDICE 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.) GREGORIO V. CABANTAC Deputy Commissioner Legal and Inspection Group