Summary
RMC No. 3-2012 clarifies the tax implications of a General Professional Partnership (GPP).
CollapseExpand
Key points
- Payments to the GPP. Income payments made to a GPP for its professional services are not subject to Income Tax. The individual partners are subject to Income Tax, and to withholding tax, in their separate capacities under Section 26 of the 1997 Tax Code, as amended.
- Partner’s share. Each partner reports as gross income his distributive share, actually or constructively received, in the net income of the partnership.
- Payments by the GPP to partners. Drawings, advances, sharings, allowances, stipends and the like paid by a GPP to partners are subject to 15% creditable withholding tax if the payments to the partner for the current year exceed P 720,000.00, and 10% if otherwise.
Who is affected
- General Professional Partnerships
- Partners of a GPP
Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.
Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.