Taxability of the Contracts Executed Prior to January 1, 1988

April 20, 1988 BIR RULING NO. 158-88 102 (a) 105-88 158-88 S i r : This refers to your letter dated February 5, 1988 requesting for opinion as to whether contracts executed prior to January 1, 1988 which considered only the 4% contractor's tax are subject to the value-added tax. cdtech In reply, please be informed that as long as the contracts/projects are completed on or before December 31, 1987, the amounts due thereon are subject to the 4% contractor's tax even if payments due thereon are received on or after January 1, 1988 but subject to the following conditions: (a) an information return shall be filed showing the name(s) of the contractee(s) and the amount(s) of the contract price outstanding as of December 31, 1987, and containing a declaration of the obligation to pay the contractor's tax due; (b) the contractor billed the unpaid amount not later than December 31, 1987, and copy of such billing is attached to the information return required in (a) thereof; (c) the contractor has recorded in his books of accounts for the year 1987 the amount receivable; and (d) the contractor files not later than January 20, 1988, and on or before the 20th day after each calendar quarter, the regular contractor's tax return for the payment of the contractor's tax on payments received in 1988. (Section 6(g), Revenue Regulations No. 5-87) With regard to contracts executed on or before December 31, 1987 which were not completed as of said date, any payments made starting January 1, 1988 shall be subject to the 10% value-added tax. cdt Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner