Batara Redublo & Partners

May 21, 2010 BIR RULING [DA-(C-016) 072-10] Sec. 26; BIR Ruling No. 093-92; BIR Ruling No. (C-115) 346-09; BIR Ruling No. DA-490-06; BIR Ruling No. DA-593-04; BIR Ruling No. DA-235-03 Batara Redublo & Partners 1804 Prestige Tower F. Ortigas Jr. Avenue Ortigas Center Pasig City Attention: Atty. Edmund A. M. Batara Managing Partner Gentlemen : This refers to your letter dated September 1, 2009, which was referred to this Office by Revenue District Office No. 43A, East Pasig City, by way of Memorandum dated September 23, 2009, requesting for a certificate of exemption from withholding tax as a general professional partnership. DIEcHa It is represented that Batara Redublo & Partners is a professional partnership duly formed, organized and existing under and by virtue of the laws of the Philippines; that it is registered with the Securities and Exchange Commission (SEC) as a partnership with SEC Registration No. PP200412368 dated August 11, 2004 with TIN 267-063-767-000. In reply thereto, please be informed that in BIR Ruling No. DA-490-06 dated August 9, 2006, this office holds that ". . . pursuant to Section 26 of the Tax Code of 1997, general professional partnerships are not subject to income tax imposed under Chapter III, Title II of the said Code. 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 partnership are exempt from the imposition of withholding tax under Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 6-2001. 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, sharing, 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. SUCH BEING THE CASE, this Office holds that the income payments made to P&A, . . ., are not subject to income tax and consequently to withholding tax prescribed in Revenue Regulations No. 2-98, as amended." Considering that the above-cited case is in all fours similar to the instant case, this Office holds that income payments made to Batara Redublo & Partners are not subject to income tax and consequently to withholding tax prescribed in Revenue Regulations No. 2-98, as amended. HTacDS 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, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner Legal & Inspection Group