Tax Rate of an Independent Contractor

February 18, 1959 BIR RULING NO. 068-59 Mr. G. H. Marshall 2711-E, Zamora St. Pasay City S i r : Reference is made to your letter of even date, requesting information as to the taxes to which the following business is subject: llcd "I have the honor to inform you that the undersigned is planning to establish a telephone answering and telephone message business within the City of Manila. "The purpose of this business will be to receive and relay telephone calls, orders, messages, instructions, etc. on behalf of my subscribers by means of Philippine Long Distance Telephone Company's (and/or other telephone companies) lines. However, this proposed business will not be connected in any way whatsoever with any existing telephone company except for the use of their facilities. "A subscriber of mine will be permitted to use my telephone number either as an alternative to his present one or by itself. In return each subscriber will sign a contract service form, and will be charged a monthly fee depending upon the number of messages, calls, etc. received and relayed to him. Thus, in effect no only can he use my telephone number as a means of communication but he will also be receiving secretarial service." In answer thereto, I have the honor to inform you that, under the aforequoted facts, you are an independent contractor, subject to the fixed annual tax of P20.00 and to the 3% contractor's tax prescribed in Sections 182(A)(1) and 191 of the National Internal Revenue Code, as amended. It is understood that the gross receipts and net income that you shall derive from the aforesaid business are, in proper cases, subject to the additional residence and income taxes. cdll Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue