BIR Ruling No. 072-61

February 6, 1961 BIR RULING NO. 072-61 This is with reference to your letter, requesting information as to whether or not a contractor is subject to the percentage tax under the following facts: cdt "'A' as a General Contractor was engaged by 'B' a proprietor to undertake the construction of an irrigation, for an example, for a fee of 10% based on the actual cost. This Contractor's fee will represent management of the project, preparation of all working, drawings necessary, coordination and direction of the work and requisitioning of construction materials. "By mutual agreement of both parties, 'A' is authorized to requisition materials and supplies exclusively for the construction of the irrigation for the account of 'B'. The invoices and bills of these construction materials and supplies are forwarded to 'A' by the suppliers and then submitted to 'B' for payment. In addition, 'A' advances for other materials urgently needed and pay labor payrolls, submitting the same to 'B' every now and then for reimbursement. cdti "This procedure is resorted to in order that 'A' will be able to make a complete and detailed cost accounting of the construction work upon which his fee of 10% is based. "The actual cost of the project is P200,000.00 and 'A' is paid 10% of the total cost, or P20,000.00 for his services." Based on the foregoing facts as presented, please be informed that "A" is considered an irrigation contractor, subject to the fixed and percentage taxes, pursuant to Sections 182(A)(1) and 191, respectively, of the Tax Code, as amended. LibLex