Basis of 4% Contractor's Tax

February 20, 1987 BIR RULING NO. 053-87 169 030-79 053-87 Gentlemen : This refers to your letter dated October 15, 1986 requesting, in effect, confirmation of your opinion that the 4% contractor's tax is based on the gross receipts derived from your client's printing services exclusive of the cost of paper and paper products furnished by its customers. It is represented that your client, Kyodo Printing Co. Inc. has two (2) kinds of businesses with a corresponding privilege tax receipt (PTRA) each, i.e., one as a supplier of raw materials (paper and paper products) and the other as a printer; that your client regards the cost of paper sold and separately invoiced to its customers as not part of the gross receipts for purposes of the 4% contractor's tax; and that the amount of percentage and subsequent sales taxes on the paper passed on to the customer are separately indicated in your clients' invoice as required by existing regulations. In reply, please be informed in the affirmative. The cost of the raw materials (paper, and paper products) supplied by your client's customers (contractees) to your client (printer-contractor) do not form part of the taxable gross receipts of your client, Kyodo Printing Co. Inc., (BIR Ruling No. 030-79 dated June 4, 1979). aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner