Exemption from Withholding Tax — Geodetic Engineer

May 12, 1980 BIR RULING NO. 048-80 Mr. Quirino P. Clemeno 58 P. Canlapan St. Batangas City S i r : This refers to your letter dated December 7, 1979 stating that you are a geodetic engineer; that in the practice of said profession, you have had several contracts with government agencies, mostly with the Bureau of Lands whereby you perform/undertake cadastral surveys; that out of your professional fee from said contract, the government agency concerned deducts a 3% contractor's tax. cd Under the foregoing facts, you now request information whether said professional fees are subject to the withholding provisions of R.A. No. 1051; whether the answer would be the same, if your contract is with private persons; and whether said gross receipts are subject to the withholding provisions of P.D. No. 1351, as implemented by Revenue Regulations No. 13-78 and 6-79. In reply, I have the honor to inform you as follows: As a professional (geodetic engineer) engaged in the practice of surveying, you are not considered a contractor for purposes of the contractor's fixed and percentage taxes under Sections 192(1) and 205 of the Tax Code, as amended. Such being the case, and considering that your undertaking cadastral survey constitutes practice of your profession, the professional fees that you derive on said undertakings from government offices like the Bureau of Lands, are not subject to the withholding provisions of R.A. No. 1051. However, under Section 1(a) (6) of Revenue Regulations No. 13-78, as amended by Revenue Regulations No. 6-79, professional fees paid to you as a geodetic engineer are subject to 5% withholding tax. Withholding is required if the payor is a government office like the Bureau of Lands, or a juridical person whether or not engaged in trade or business. On the other hand, if the payor is an individual, withholding is required only if payments of the professional fee is made in connection with payor's trade or business. (Sec. 2, Revenue Regulations No. 13-78, as amended. aisadc Very truly yours, RUBEN B. ANCHETA Deputy Commissioner