Taxability of the Winning Bid for the Construction of the INP and Social Hall Building of Macalelon, Quezon

November 4, 1988 BIR RULING NO. 528-88 50; 102 (a) 000-00 528-88 Gentlemen : This refers to your letter dated September 25, 1988 stating that you are a duly licensed and accredited contractor of the 1st and 2nd Engineering District of Quezon and the Bureau of Health; and that recently, you won a bid for the construction of the INP and Social Hall Building of Macalelon, Quezon. You are requesting for a ruling as to whether the amount bid of P304,172.00 is subject to the 4% contractor's tax and 1% tax to be withheld by the Municipal Treasurer of Macalelon, Quezon for remittance to the Bureau of Internal Revenue. In reply, please be informed that the said money payment to you is subject only to the 1% expanded withholding tax under Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 13-86 but not the contractor's tax of 4% previously imposed under Revenue Regulations No. 4-83 implementing Republic Act No. 1051. This is so because the value-added tax has replaced the contractor's tax effective January 1, 1988. In other words, you are now subject to the 10% value-added tax under Section 102(a) of the Tax Code, as amended by Executive Order No. 273. However, the value-added tax, the amount of which can not be fixed, determined, computed or ascertained at the time of such payments by the government offices, instrumentalities and agencies is not subject to the withholding provisions of RA No. 1051 and its implementing regulations. (RMC No. 18-88 dated March 24, 1988) Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner