Taxation of Private Detective and Watchman Agencies

September 24, 1973 BIR RULING NO. 026-73 Security agencies operating under Republic Act No . 5487, as amended, liability to the 3% . "The term 'independent contractor's includes persons (juridical or natural) not enumerated above (but not including individuals subject to the occupation tax under Section 182 (B) of this Code) whose activity consists essentially of the sale, of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractors or their employees." (Section 191, Tax Code, as amended by Presidential Decree No. 69) The inclusion of the foregoing definition in the law is to consider all independent contractors falling within the definition as subject to the 3% tax imposed by Section 191 of the Tax Code. And under the above definition, it would seem that security agencies fall within the purview of the term "independent contractors". However, the above-quoted provision being a general law, did not abrogate Section 8 (d) of Republic Act No. 5487 providing that private detective and watchman agencies "shall pay . . . a fixed Internal Revenue Tax of P100.00 per annum in lieu of percentage taxes" which is a special law. In other words, despite the amendment of Section 191 of the Tax Code by Presidential Decree No. 69, security agencies are still exempt from the 3% contractor's tax.