A Contractor Undertaking a Project With an Agency of the Government is Subject to Contractor's Tax and to the Expanded Withholding Tax

December 23, 1987 BIR RULING NO. 418-87 170 000-00 418-87 Gentlemen : This refers to your letter dated July 20, 1987, requesting a ruling as to whether payments received by you on your present project with an agency of the government which are funded from U.S. aid are subject to the contractor's tax and to the expanded withholding tax. In reply, please be informed that as a contractor undertaking a project with an agency of the government even if funded by U.S. aid, you are subject to 4% contractor's tax imposed under Section 170 of the Tax Code as amended. Consequently, the contractor's tax shall be deducted and withheld from the gross money payments to you by said government agency pursuant to Section 3(a)(3) of Revenue Regulations 20-86 implementing Republic Act No. 1051. Likewise, 1% expanded withholding tax shall be deducted and withheld from gross payments to you, pursuant to Section 1(e) of Revenue Regulations No. 6-85 otherwise known as the Revised and Consolidated Expanded Withholding Tax Regulations. atdc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner