Amending Subparagraph (B) Of Section 84 And Section 191 Of The National Internal Revenue Code, As Amended
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Amending Subparagraph (B) Of Section 84 And Section 191 Of The National Internal Revenue Code, As Amended
Presidential Decree No. 929
May 4, 1976
Case Overview and Summary
Summary of Presidential Decree No. 929Rationale:
- Local contractors contribute to the country's development program.
- Local contractors are at a disadvantage compared to foreign contractors due to limited capital and resources.
- Joint ventures allow local contractors to pool resources for big construction projects.
- Joint ventures formed by local contractors should not be subject to additional income tax.
- The corporate income tax is imposed on joint ventures and their constituent entities.
- The contractor's tax is based on the total contract price received by the principal contractor and the portion allocated to subcontractors.
- Double taxation of gross receipts diminishes the competitiveness of local contractors.
Provisions:
- Section 1 (amending Section 84(b) of the National Internal Revenue Code):
- The term "corporation" does not include a joint venture formed for undertaking construction projects. (Basis: Section 1)
- Section 2 (amending Section 191 of the National Internal Revenue Code):
- The term "gross receipts" shall not include the portion of the total contract price paid by a principal contractor to a subcontractor under a subcontract arrangement, which shall form part of the taxable gross receipts of the subcontractor. (Basis: Section 2)
- Section 3:
- This Decree shall take effect beginning with calendar year 1976. (Basis: Section 3)
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Law
Amending Subparagraph (B) Of Section 84 And Section 191 Of The National Internal Revenue Code, As Amended
Presidential Decree No. 929
•May 4, 1976
MALACAÑANGM a n i l a
PRESIDENTIAL DECREE No. 929 May 4, 1976
AMENDING SUBPARAGRAPH (b) OF SECTION 84 AND SECTION 191 OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED
WHEREAS, local contractors contribute substantially to the development program of the country;
WHEREAS, local contractors are at a disadvantage in competitive bidding with foreign contractors in view of limited capital and financial resources;
WHEREAS, in order to be able to compete with big foreign contractors, it may be necessary for them to enter into joint ventures to pool their limited resources in undertaking big construction projects;
WHEREAS, to assist them in achieving competitiveness with foreign contractors, the joint ventures formed by them should not be considered an additional income tax;
WHEREAS, the corporate income tax is imposed on joint ventures as well as on the entities composing such joint ventures;
WHEREAS, the 3x contractor's tax is based both on the total contract price received by a principal contractor and on the portion of such contract price which is allocated by the said principal contractor to...
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