Amount Actually Received Equivalent to the Sum of the So-called Gross Pay and Commission is Subject to 4% Contractor's Tax

November 27, 1987 BIR RULING NO. 384-87 170 000-00 384-87 S i r : This refers to your letter dated June 16, 1987 requesting a ruling as to the basis of the 4% contractor's tax imposed by Section 170 of the Tax Code. It appears that Victorias Milling Company, Inc. engages Premier Allied Services to recruit and supply its requisite labor requirements; and that while the milling company dictates the amount which the laborers should be paid specifically indicating in the payment receipt the amount due them known as gross pay and the amount due to the contractor known as commission, nevertheless the full amount representing the contract price of the project is received by Premier Allied Services. In reply, I have the honor to inform you that the term "gross receipts" means all amounts received by the prime or principal contractor as the total contract price, undiminished by any amount paid to the sub-contractor under a subcontract arrangement. Accordingly, the amount actually received by Premier Allied Services equivalent to the sum of the so-called gross pay and commission is subject to the 4% contractor's tax pursuant to Section 170 of the Tax Code, as amended by P.D. No. 1994. adc Very truly yours, (SGD.) EUFRACIO D. SANTOS Officer-in-Charge