BIR Ruling No. 047-83

March 22, 1983 BIR RULING NO. 047-83 S i r : This refers to your letter dated February 22, 1983 requesting a ruling as to whether or not the partnership formed by your clients who are licensed architect, civil engineer and an electrical engineer, is subject to the 3% contractor's tax. You have represented that your clients, who for several years have collaborated with each other in drawing up architectural engineering and electrical designs for various projects, have decided in 1978 to form a partnership for the purpose of practising their respective professions jointly; that the name of the partnership adopted was "Asian Design Collaborative Co." (Architects and Engineers); that under the articles of partnership which was duly registered with the Securities and Exchange Commission, the firm was formed for the purpose of engaging in architectural works shall be done by a qualified architect and all engineering works shall be done by a qualified engineer; that during the existence of the partnership which was dissolved on July 27, 1981, it did not engaged in any activity other than the production of architectural, engineering and electrical designs for building and other structures, neither did it engage in construction business nor undertake any work in connection with construction, except drawing up plans and specifications for construction projects; and that for the duration of the partnership, your clients have dutifully paid their respective professional taxes with each of them working only on designs falling within his particular field of expertise. In reply, I have the honor to inform you that under the foregoing facts, the Asian Design Collaborative Co. is a partnership formed by individuals who are subject to occupation tax under Section 12 of the Local Tax Code; and that the activities of the partnership are limited only to the practice of the individuals professions; hence it is not considered an independent contractor. Such being the case, it is not subject to the fixed tax of P100.00 prescribed in Section 192(1) and to the 3% contractor's tax imposed by Section 205(16), both of the Tax Code of 1977, as amended. cdtech Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue