Contractor for US Bases and Optional Standard Deduction

April 15, 1959 BIR RULING NO. 224-59 The Philippine Free Press Free Press Building 708 Rizal Avenue, Manila Attention : Information Department Gentlemen : As requested in your letter of March 23, 1959, hereunder are the answers to the inquiries of Messrs. Benedicto Z. Rivera and Donato M. Cariaso. cdll Re: Query of Mr . Benedicto Z . Rivera Mr. Rivera himself has previously addressed a similar query to this Office which was already answered. The pertinent portion of our answer reads as follows: ". . . a person who furnishes labor and who under contracts, undertakes construction works exclusively for the United States Bases is not a business agent but a contractor. The said person is, however, exempt from the 3% contractor's tax and the compensating tax on the materials he may import in connection with his construction works, pursuant to the P.I. U.S. Military Bases Agreement as supplemented by the exchange of notes between the Philippine and the United States Government on December 29, 1952; but, he is, nevertheless, subject to the income tax, the basic residence tax and, in proper cases, the additional residence tax." Re: Queries of Mr . Donato M . Cariaso A person required by law to file his income tax return whose gross quarterly receipts or earnings do not exceed P5,000, except those whose only source of income is their salary, must file with the said return the statement of net worth (balance sheet) and operations (profit and loss) regardless of whether or not he has elected the optional standard deduction from gross income allowed under section 30(K) of the National Internal Revenue Code. The optional standard deduction is simpler and easier to compute than the itemized deductions. Itemized deductions have to be substantiated when the circumstances so warrant as when the deduction claimed appear to be unreasonable. In the absence of evidence to prove them, they are generally disallowed. The optional standard deduction under any circumstance need not be proven in order to be allowed. As further requested, the basic inquiries are returned herewith. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue