Sculptural Works Rendered to DFA by Specialty Contractor Subject to 1% Creditable Withholding Tax

February 25, 1999 BIR RULING NO. 024-99 000-00-024-99 Abueva Sculptures No. 1, Gabriela Silang Street Tierra Verde Homes Tandang Sora Quezon City Attention: Mr . Napoleon Veloso Abueva National Artist Gentlemen : This refers to your letter dated November 25, 1998 requesting for a ruling as to whether or not the services you have rendered to the Department of Foreign Affairs for some sculptural works can be classified as specialty contractor subject to creditable withholding tax imposed under Revenue Regulations No. 2-98. cdlex It is represented that you are a national artist for sculpture as certified to by the National Commission for Culture and the Arts dated November 10, 1998; that you were hired by the Department of Foreign Affairs to provide sculptural works for the bust of Secretary Narciso Ramos and of the four (4) other ASEAN Signatories together with the plates, markers and pedestals, more particularly described as follows: 1.1. Bust for each Signatory: Material - Bronze Size - Thirty inches (30") in height Cost - Two Hundred Fifty Thousand Pesos (P250,000.00), per bust or a total of One Million Two Hundred Fifty Thousand Pesos (P1,250,000.00) net of VAT 1.2. Plate for Signatory's Name/Title Material - Brass Size - Five Inches by Twelve Inches (5" x 12") Cost - Six Thousand Pesos (P6,000.00) for each plate 1.3. Marker for Description of Signatory Material - Brass Size - One over eight inches by Fourteen inches by Twenty Two inches (1/8" x 14" x 22") Cost - Eleven Thousand Four Hundred Fifty Pesos (P11,450.00) for each marker. 1.4. Pedestal for Bust Material - Granite Size - 1.10 x 40 x .35 Cost - Twenty Thousand Pesos (P20,000.00) for each pedestal In reply, please be informed that Section 2.57.2(E)(3) of Revenue Regulations No. 2-98 provides that those whose operations pertain to the performance of construction work requiring special skill and whose principal contracting business involves the use of specialized building trades or crafts shall be subject to the 1% creditable withholding tax based on the gross payments of the contractors, whether individual or corporate. Such being the case, since a national artist for sculptural works falls within the category of specialty contractor under Section 2.57.2(E)(3) of said Regulations, payments made by the Department of Foreign Affairs to you, as national artist, are subject to the 1% creditable withholding tax. prLL 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.) BEETHOVEN L. RUALO Commissioner of Internal Revenue