Taxability of Architects and "Paquiao Work Contractors"

May 15, 1959 BIR RULING NO. 273-59 Mr. Nicanor Cabato San Jose Road Zamboanga City S i r : In reply to your queries regarding the taxability of architects and "paquiao work contractors", I have the honor to inform you as follows: cdt The professional fees received by an architect for supervision services are not subject to the 3% contractor's tax prescribed in section 191 of the Tax Code. But an architect who is at the same time a building contractor is subject to the aforesaid tax based on his total gross receipts thereof without any deductions. Any person who performs any of the activities enumerated in section 191 is a contractor, regardless of whether he does so under an original contract or subcontract. However, the term "paquiao contractors" is oftentimes referred to as a group of laborers who are employed usually in public works. These laborers are essentially employees and not contractors. Hence, the taxability of the so-called "paquiao contractors" has to be decided in accordance with the merits of each case. As a rule, principal contractors and subcontractors are both subject to tax. The principal contractor is liable on the amount received by him from the contractee minus the amount paid by him to the subcontractor and the latter on the amount received by him from the principal contractor. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue