Staffing Services Rendered with the ADB Building Construction Prior to April 21, 1987 are Not Subject to Contractor's Tax

August 31, 1987 BIR RULING NO. 251-87 170 000-00 251-87 Gentlemen : This refers to your letter dated July 2, 1987 requesting exemption from the 4% contractor's tax on the staffing services you rendered with the Asian Development Bank's building construction. It is represented that your company entered into a contract with ADB's Project Management Consultants by supplying manpower services or assigning temporary employees at ADB New Headquarter's project site; that you have been rendering this kind of service even before the effectivity of Executive Order No. 161; and that you bill ADB for the cost of services. In reply, please be informed that, pursuant to Executive Order No. 161 which took effect on April 21, 1987, "services rendered under contracts entered into with the Asian Development Bank shall not be subject to contractor's tax." Accordingly, your gross receipts derived from said contract with ADB beginning April 21, 1987 are not subject to the contractor's tax imposed by Section 170 of the Tax Code, while the gross receipts derived prior to said date are subject to tax. In this connection, if your contract with the ADB was entered into or renegotiated prior to October 15, 1984 (date of effectivity of the increased rate of the contractor's tax effected by P.D. No. 1959), you are subject to contractor's tax at the rate of 3%. The increased rate of 4% applies only with respect to contracts entered into or renegotiated on or after October 15, 1984. (Sec. 1, Revenue Regulations No. 7-85) Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner