BIR Ruling No. 307-82

December 13, 1982 BIR RULING NO. 307-82 321-00 000-00 307-82 Engineering Equipment, Inc. and F.F. Maacop Construction Co., Inc. Joint Venture 86 West Avenue, Quezon City Attention: Atty . Antonio C . Ravelo Vice-President for Administration and Finance Project Principal, FFMCCI Gentlemen : This refers to your letters dated December 21, 1981 and January 12, 1982 requesting that your joint venture partnership which is undertaking a certain government construction project be exempted from the payment of income tax; that you be allowed to order from your printers the printing of official receipts, invoices and other business forms; and to register separate books of accounts for the joint venture. cdta Documentary evidence submitted show that Engineering Equipment, Inc. (EEI) and F.F. Maacop Construction Company, Inc. (FFMCCI), which are corporations duly registered in accordance with the laws of the Republic of the Philippines, entered into a contractual relationship whereby they will undertake the construction of the Iloilo Fishing Port of the Ministry of Public Works for and in consideration of an estimated price of P118,449,992.13; that under this relationship, FFMCCI shall manage the implementation and prosecution of the project as Project Principal; that EEI and FFMCCI shall contribute equally to a common fund to prosecute the project; that the parties shall participate equally in the profits, after deducting project management fees; and that there is joint and several commitment, responsibility and undertaking of the parties, as well as their right to collect payment from the Government. In reply thereto, I have the honor to inform you that under the foregoing facts, a joint venture or consortium was formed for the purpose of undertaking a construction project. Accordingly, the joint venture is exempt from the corporate income tax pursuant to Section 20(b) of the Tax Code, as amended by P.D. No. 1774. Such being the case, it is not required to file quarterly and final or adjustment returns with respect to income earned from the said project. However, the joint venture is subject to the payment of business taxes, such as the fixed tax of P100.00 and 3% contractor's tax prescribed by Sections 192(l) and 205 of the Tax Code, as amended. Moreover, since all corporations, companies, partnerships or persons required by law to pay internal revenue taxes, are required to keep books of accounts pursuant to Section 321 of the Tax Code, as implemented by Revenue Regulations No. V-1, otherwise known as the "Bookkeeping Regulations", the joint venture is, therefore, required to register with this office the joint venture's books of accounts, invoices and receipts serially numbered in duplicate, showing among other things, its name or style and business address, before starting its operation as a joint venture. This registration and printing requirement, however, is within the jurisdiction of the Regional Director of the region where the principal office of the joint venture is located. 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, RUBEN B. ANCHETA Acting Commissioner