Nothing Special   »   [go: up one dir, main page]
Scribd Logo
Upload

Welcome to Scribd!

  • 318 views

    BIR Ruling (DA - (C-003) 020-10)

    Uploaded by

    amadieu
    This document is a ruling from the Bureau of Internal Revenue (BIR) clarifying the tax treatment of M Power Service Solutions, Inc., a manpower and general maintenance services provider. The BIR rules that unlike security agencies, the primary obligation to pay worker salaries for other service providers like M Power rests with the service provider, not the client. As such, RMC No. 39-2007 governing security agency taxes does not apply to M Power. Clients are still considered withholding agents required to deduct and withhold 2% tax on income payments to M Power and other business agencies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    BIR Ruling (DA - (C-003) 020-10)

    Uploaded by

    amadieu
    318 views2 pages
    This document is a ruling from the Bureau of Internal Revenue (BIR) clarifying the tax treatment of M Power Service Solutions, Inc., a manpower and general maintenance services provider. The BIR rules that unlike security agencies, the primary obligation to pay worker salaries for other service providers like M Power rests with the service provider, not the client. As such, RMC No. 39-2007 governing security agency taxes does not apply to M Power. Clients are still considered withholding agents required to deduct and withhold 2% tax on income payments to M Power and other business agencies.

    Original Description:

    BIR; Issuance

    Original Title

    BIR Ruling [DA-(C-003) 020-10]

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document is a ruling from the Bureau of Internal Revenue (BIR) clarifying the tax treatment of M Power Service Solutions, Inc., a manpower and general maintenance services provider. The BIR rules that unlike security agencies, the primary obligation to pay worker salaries for other service providers like M Power rests with the service provider, not the client. As such, RMC No. 39-2007 governing security agency taxes does not apply to M Power. Clients are still considered withholding agents required to deduct and withhold 2% tax on income payments to M Power and other business agencies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    318 views2 pages

    BIR Ruling (DA - (C-003) 020-10)

    Uploaded by

    amadieu
    This document is a ruling from the Bureau of Internal Revenue (BIR) clarifying the tax treatment of M Power Service Solutions, Inc., a manpower and general maintenance services provider. The BIR rules that unlike security agencies, the primary obligation to pay worker salaries for other service providers like M Power rests with the service provider, not the client. As such, RMC No. 39-2007 governing security agency taxes does not apply to M Power. Clients are still considered withholding agents required to deduct and withhold 2% tax on income payments to M Power and other business agencies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 2

    January 29, 2010

    BIR RULING [DA-(C-003) 020-10]

    RR No. 17-2003; BIR Ruling No. 049-85

    M Power Service Solutions, Inc.


    Units 201-202, La Fuerza Plaza II
    2241 Don Chino Roces Avenue
    Makati City

    Attention: Ms. Isabelita G. Bajacan


    Office Manager

    Gentlemen :

    This refers to your letter dated November 3, 2008 requesting for clari cation on
    whether M Power Service Solutions, Inc. ("M Power"), engaged in providing personnel,
    manpower and general maintenance services, is covered under Revenue Memorandum
    Circular (RMC) No. 39-2007.
    It is represented that M Power is engaged in providing quali ed and properly
    trained personnel to address manpower and general maintenance needs of its clients,
    more specifically, janitorial and similar needs.
    In reply, please be informed that in the case of Protector's Services, Inc. vs. Court
    of Appeals and Commissioner of Internal Revenue, G.R. No. 118176 dated April 12,
    2000, the Supreme Court held as follows:
    "Contractor's tax on gross receipts imposed on business agents including
    private detective watchman agencies was a tax on the sale of services or labor,
    imposed on the exercise of a privilege. The term "gross receipts" means all
    amounts received by the prime or principal contractor as the total price,
    undiminished by the amount paid to the subcontractor under a subcontract
    arrangement. Hence, gross receipts could not be diminished by employer's SSS,
    SIF and Medicare contributions. Furthermore, it has been consistently ruled by
    the BIR that the salaries paid to security guards should form part of the gross
    receipts, subject to tax, to wit: SDTIHA

    '. . . This O ce has consistently ruled that salaries of


    security guards form part of the taxable gross receipts of a
    security agency for purposes of the 4% [formerly 3%] contractors
    tax under Section 205 of the Tax Code, as amended. The reason is
    that the salaries of the security guards are actually the liability of
    the agency and that the guards are considered their employees;
    hence, for percentage tax purposes, the salaries of the security
    guards are includible in its gross receipts. (BIR Ruling No. 271-81
    citing BIR Ruling No. 69-002)'
    These rulings were made by the CIR in the exercise of his power to 'make
    judgments or opinions in connection with the implementation of the provisions
    of the internal revenue code.' The opinions and rulings of o cials of the
    government called upon to execute or implement administrative law, command
    respect and weight. We see no compelling reason in this case to rule otherwise.
    CD Technologies Asia, Inc. 2017 cdasiaonline.com
    WHEREFORE, the assailed decision of the Court of Appeals, in CA-G.R. SP
    31825, is AFFIRMED. Costs against petitioner."
    However, Section 1, Rule XIV of the 1994 Revised Rules and Regulations
    implementing Republic Act No. 5487, as amended, governing the "Organization and
    Operation of Private Security Agencies and Company Security Forces throughout the
    Philippines," places the primary obligation on the client to pay the salaries of the
    security guards and requires that the monies received by the security agency
    representing salaries shall be earmarked and segregated for the said guards, and not
    form part of the security agency's gross income and taxable gross receipts when
    actually or constructively received.
    Unlike in the case of security agencies wherein the primary obligation to pay the
    salaries of the security guards rests on the clients, the primary obligation to pay the
    salaries of the workers of other service providers rests not on their clients but on the
    service providers themselves. This places the security agencies on a tax situation
    different from other service providers. IHCESD

    Moreover, in the interpretation of statutes, it is the established rule not to extend


    their provisions by implication, beyond the clear import of the language employed, or to
    enlarge their scope as to include matters not speci cally pointed out. There is nothing
    in the context of RMC No. 39-2007 that would manifest or suggest the intention to have
    the RMC apply to manpower agencies i.e., janitorial and clerical services, other than
    security agencies. Thus, unless expressly mentioned in the issuance, the RMC cannot
    apply to agencies other than security agencies as speci cally and expressly provided in
    its subject.
    In view of all the foregoing, clients of service providers are considered
    withholding agents required to deduct and withhold the 2% creditable tax on its income
    payments to business agencies inclusive of salaries, SSS, Philhealth and Pag-ibig
    contributions pursuant to Section 2.57.2 (E) (3) (k) of Revenue Regulations (RR) No. 2-
    98, as amended. The 2% withholding tax is based on the gross receipts received by the
    business agencies which include the agency commission plus salaries and the
    aforesaid contributions.
    This ruling is being issued on the basis of the foregoing facts as represented.
    However, if upon investigation, it will be disclosed that the facts are different, then this
    ruling shall be considered as null and void.

    Very truly yours,

    Commissioner of Internal Revenue


    By:

    (SGD.) GREGORIO V. CABANTAC


    Deputy Commissioner
    Legal and Inspection Group

    CD Technologies Asia, Inc. 2017 cdasiaonline.com

    You might also like