BIR Ruling No. 180-84

November 21, 1984 BIR RULING NO. 180-84 205-15-091-83-180-84 Gentlemen : This refers to your letter dated May 7, 1984, requesting for and in behalf of your client, Trans-Orient Overseas Contractors, Inc. (TOOC), exemption from contractor's tax on the contract price it receives for rendering services and labor abroad. It is represented that Trans-Orient Overseas Contractors Inc. (TOOC) is a domestic corporation which is duly licensed contractor for labor and services required in construction projects abroad under the Labor Code, as amended and Policy Instruction No. 22 and 34 as per certificate (RCC No. 07-0387) dated June 28, 1984 of the Philippine Overseas Employment Administration; that it has several contractors for labor and services in various construction projects in the Middle East; that under this set-up, TOOC employs the services of various skilled and unskilled employees and laborers like engineers, electricians, carpenters, etc. for the purpose of assigning said employees to the various construction projects it has abroad; that the teams of workers which TOOC sends abroad to fulfill its construction services are complete working groups for the projects involved; that all its workers go abroad for specific labor projects; that TOOC charges the entities abroad for the engineering and labor services rendered in construction jobs abroad; that it bills its clients on a monthly basis for construction services rendered; that it likewise gets reimbursements for mobilization, travel and other cost incidental to the dispatch of its employees to the construction site. In reply, please be informed that under the foregoing facts, your client is exempt from the contractor's tax imposed by Section 205 of the Tax Code on the contract price received for services and labor rendered abroad. The Supreme Court in the case of Manila Electric Company vs. A.L. Yatco & CIR, 69 Phil. 89, citing U.S. jurisprudence, has held that "as the State is forbidden to deprive a person of his liberty without due process of law, it may not compel anyone within its jurisdiction to pay tribute to it for contract or money paid to secure the benefits of contract made and to be performed outside the state". Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner