Partnership of Individual Professional Architects Not Subject to Contractor's Fixed and Percentage Taxes

November 5, 1985 BIR RULING NO. 194-85 205 060-85 194-85 Gentlemen : This refers to your letter dated July 15, 1985 requesting clarification as to whether fees paid to you as a partnership of Licensed Professional Architects are subject to the contractor's fixed and percentage taxes. It is represented that your firm is duly registered with the Securities and Exchange Commission as a partnership engaged in the general practice of architectural profession; that on June 16, 1985 you are entered into a contract for Architectural and Engineering Services with the Philippine Ports Authority (PPA) whereby you will undertake the structural design and preparation of the detailed working drawings, specifications, detailed cost estimates, tender documents, invitation for bidding, assisting PPA in the conduct of bidding and award of contract, and inspection and supervision of the renovation of its Myers Building at Boston St., South Harbor, Manila; and that the professional fees paid to you by virtue of said contract are being subjected to the 4% contractor's tax and .45% expanded withholding tax. In reply, I have the honor to inform you that as a partnership of individual professional architects, your firm is not considered an independent contractor hence, it is not subject to the contractor's fixed and percentage taxes imposed under Sections 192(1) and 205 of the Tax Code, as amended. Moreover, payments to said partnership for professional services such as those derived from the aforementioned contract are exempt from the withholding tax provisions of Revenue Regulations No. 6-85, otherwise known as the Revised and Consolidated Expanded Withholding Tax Regulations, implementing Section 53(f) of the Tax Code, as amended. The above ruling is based on your representation and the same will be revoked if, after investigation, it is ascertained that the facts are different from those represented. Very truly yours, (SGD.) TOMAS C. TOLEDO Acting Commissioner