BIR Ruling No. 042-62

February 6, 1962 BIR RULING NO. 042-62 Mr. Pedro V. Javier Attorney-at-Law 722 Ongpin, Manila S i r : Reference is made to your letter dated September 28, 1961, requesting information as to what privilege and percentage taxes your client, Mr. Chua Chin, is liable for engaging in business as follows: cdta "1. Glass Edging : In this case, Mr. Chua Chin will accept orders for glass edging, grinding the edges to make them smooth, which job, he will in turn order from other business doing this nature of service. Mr. Chua Chin will not actually do the glass edging. It will be done by persons who have facilities for glass edging. In other words, he will have the work done by a sub-contractor. For this service, he will keep the difference between the amount of the original contract and the amount that he will pay to the sub-contractor. "2. Glass Designing : Mr. Chua Chin will also accept jobs or glass designing, but the work will be done by a sub-contractor. None of the work will be done in his place of business. His receipts in this business will be the difference between the amount of the original contract and the amount that he will pay to the sub-contractor. "3. Glass Drilling : Mr. Chua Chin will also receive orders for glass drilling, but the actual work will be done by a sub-contractor. As in other cases, his compensation will be the difference between the amount of the original contract and the amount paid to the sub-contractor. "4. Mirror Making : Mr. Chua Chin intends also to receive orders for mirror making according to specifications. The actual making will not be done by him, but by a sub-contractor who has the facilities for the job. As in other cases, his compensation will be the difference between the original contract and the amount paid to the sub-contractor." It appears also, according to your telephone information, that your client is in the glass business. Under circumstances, therefore, your client is subject to the fixed and percentage taxes prescribed in section 182(A)(1) and 191 of the Tax Code. For the purpose of computing the 3% tax, your client is not entitled to deduct from the receivables that which he pays to the sub-contractor (Sec. P. J. Kiener Co., Ltd. vs. Antonio J. Araneta, etc., C.T.A. Case No. 102, November 2, 1959). Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue