Salaries of Security Guards Form Part of the Taxable Gross Receipts of a Security Agency

December 16, 1981 BIR RULING NO. 271-81 205-16 002-69 271-81 Airborne Security Service, Inc. Room 323 Manila Textile Market Building C.M. Recto Avenue M a n i l a Attention: Mr . Andres E . Solis President Gentlemen : This refers to your letter dated September 30, 1980 requesting information as to whether or not salaries of security guards should form part of the gross receipts of the corporation for purposes of computing the 3% contractor's tax. In reply, please be informed that pursuant to BIR Ruling No. 69-002 dated February 17, 1969, salaries of security guards form part of the taxable gross receipts of a security agency for purposes of the 3% tax under Section 205 (formerly Sec. 191) of the Tax Code of 1977, as amended. The reason is that salaries of the guards are actually the liability of the agencies and that the guards are considered their employees. Accordingly, salaries of the security guards should be included in your gross receipts for purposes of computing the 3% tax. The aforesaid ruling which finds support in the case of Resty Arbon Singh vs. Commissioner of Internal Revenue, CTA Case No. 1901, December 5, 1970, has revoked the ruling cited in your letter as well as BIR Ruling No. 65-103 dated September 14, 1965 which ruled that amounts paid as salaries of security guards are not considered part of the gross receipts of the security agency for purposes of computing the 3% tax. aisadc Very truly yours, RUBEN B. ANCHETA Acting Commissioner