Question & AnswerQ&A (BIR REVENUE MEMORANDUM CIRCULAR NO. 3-2012)
A General Professional Partnership as such is not subject to income tax. Instead, the individual partners are liable for income tax in their separate and individual capacities.
The net income of the partnership shall be computed in the same manner as a corporation for purposes of determining the distributive share of the partners.
Each partner must report as gross income his distributive share, actually or constructively received, in the net income of the partnership.
No, income payments made to a General Professional Partnership for its professional services are exempt from withholding tax.
Section 2.57.5 of Revenue Regulations No. 2-98, as amended, exempts income payments made to General Professional Partnerships from withholding tax.
A General Professional Partnership is defined as partnerships formed by persons for the sole purpose of exercising their common profession and not derived from engaging in any trade or business.
No. While the term 'corporation' generally includes partnerships, it specifically excludes General Professional Partnerships.
Yes. Such payments are subject to withholding tax: 15% if the payments to the partner exceed P720,000 in the year, or 10% otherwise.
Section 2.57.2(H) of Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 30-03.
The individual partners are responsible for paying income tax on their distributive shares of the partnership's net income, not the partnership itself.