Government Payment to NGOS, PTAS, ETC. Doing Infra Projects Subject to VAT - Creditable Withholding Tax

October 14, 1993 BIR RULING NO. 412-93 GOV'T. PAYMENT TO NGOs, PTAs, ETC. DOING INFRA PROJECTS SUBJECT TO VAT CREDITABLE WITHHOLDING TAX 102 110 000-00 412-93 Congressman Rodolfo T. Tuazon House of Representatives Quezon City This refers to your letter dated August 5, 1993 requesting in effect for a ruling on whether or not Non-Governmental Organizations (NGOs), Parents Teachers Association (PTA) and barangay councils, which are undertaking projects of the Department of Public Works and Highways (DPWH) through pakyaw agreements are exempt from the provisions of Revenue Regulations No. 10-93 requiring the withholding of creditable value-added tax. cdta In reply, please be informed that Revenue Regulations No. 10-93 was promulgated to govern the manner of withholding a remittance of taxes on account of payments made by the government for purchases of goods and services subject to value-added tax. If as represented NGOs, PTA and barangay councils undertake infrastructure projects of the DPWH, their sales of services to the government are subject to 10% value-added tax under Section 102 of the Tax Code, as amended. Such being the case, this Office is of the opinion as it hereby holds that the payment to be made by the government on account of the services rendered by NGOs, PTAs and barangay councils in undertaking infrastructure projects of the DPWH are subject to the VAT creditable withholding tax of 6% on gross receipts, pursuant to Section 110 of the Tax Code, as amended by Republic Act No. 7649 as implemented by Revenue Regulations No. 10-93. cd LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue