News and Features Services Company Writing and Distributing Stories to Publishers is an Independent Contractor Subject to Annual Fixed Tax and Contractor's Tax

December 8, 1987 BIR RULING NO. 391-87 170 000-00 391-87 Gentlemen : This refers to your letter dated October 15, 1987, in effect, requesting a ruling on the tax consequence of the business activity of your client, Interco Press, Inc., a news and feature services company with headquarters in New York, U.S.A. It is represented that your client is primarily engaged in the business of writing and distributing stories and articles on international events and personalities not only to newspapers and publishers in the Philippines but also to Asia and other foreign countries; that its commentaries and analysis of international, political and economic affairs are translated into 12 languages and are released on a weekly basis; and that in consideration for its services, your client bills the newspapers for the article published on a monthly basis. In reply, please be informed that under the foregoing facts, your client renders service; hence it falls within the purview of an independent contractor as defined in Section 170(q) of the Tax Code quoted as follows: "(q). The term "independent contractor includes persons (juridical or natural) not enumerated above (but not including individuals subject to the occupation tax under the Local Tax Code) whose activity consists essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractors or their employees." Accordingly, you are subject to the fixed annual tax of P200.00 and to the 4% contractors tax pursuant to Sections 161(1) and 170 respectively of the Tax Code. aisadc Consequently, your request for refund in the amount of P73,463.01, representing your payment of 4% contractor's tax from the third quarter of 1986 to the second quarter of 1987 cannot be given due course for lack of legal basis. Very truly yours, (SGD.) EUFRACIO D. SANTOS Officer-in-Charge