Tax Liabilities of a Security Agency

April 23, 1984 BIR RULING NO. 070-84 205-16-81-82-070-84 Gentlemen : This refers to your letter dated June 7, 1982, requesting a ruling as to whether you are subject to the 3% contractor's tax in view of varied opinions on the matter expressed by certain BIR personnel at Legaspi City. In reply, please be informed that as a security agency, beginning June 11, 1978 (effective date of P.D. No. 1457) you are subject to the annual fixed tax of P100.00 prescribed in Section 192(1) of the Tax Code, as amended, and to the 3% contractor's tax on your gross receipts imposed under Section 205 (16) of the same Code. It will be noted that Section 33 of P.D. No. 1457 specifically repealed paragraph (d) of Section 8 of Republic Act 5487 which requires a private detective and watchman agency to pay a fixed internal revenue tax of P100.00 per annum in lieu of percentage taxes. Moreover, Section 24 of P.D. No. 1457 amended Section 205(16) of the Tax Code so as to include said agency as subject to the 3% contractor's tax. Finally, in the case of money payments made to you by government offices and agencies, the 3% contractor's tax due on said payment shall be deducted, withheld and remitted to the Bureau by said offices and agencies, in accordance with Revenue Regulations No. 4-83 implementing Republic Act No. 1051. In addition to the contractor's tax, 15% of the gross payments to you are subject to 3% expanded withholding tax under Section 2(f) of Revenue Regulations No. 13-78, as amended by Revenue Regulations No. 6-79, implementing Presidential Decree No. 1351, now Section 53(f) of the Tax Code. atdc Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner