BIR Ruling

April 26, 1976 Mr. Antonio G. Saqueton Provincial Engineer Trece Martires City S i r : This refers to your letter dated March 18, 1976 requesting information whether the 3% tax being withheld by the Provincial Auditor from the reimbursement of the cost of gasoline, diesel and oil that you purchase for the use of the vehicles and/or equipment of your Office is within the withholding provisions of Republic Act No. 1051. aisa dc It is represented that an employee who is assigned to a vehicle and/or equipment pays out of his own pocket for the cost of gasoline, diesel and oil that he purchases from time to time from gasoline stations; that at the end of each month, your Office reimburses the fuel expenses incurred by the employee concerned; and that while in the past no tax is being withheld on reimbursements of your fuel expenses, the Provincial Auditor however started enforcing the 3% withholding tax last February, 1976. In reply, I have the honor to inform you that said purchases of gasoline, diesel or oil made by your employee from gasoline stations for the use of the vehicles and/or equipment of your Office are exempt from the withholding provisions of Republic Act No. 1051 as implemented by Revenue Regulations No. 21-67. The employee concerned is not the proper party against whom the withholding tax should be imposed. Pursuant to Revenue Regulations No. 21-67, the private individuals , corporations, partnerships and associations referred to in Section 1 of R.A. No. 1051 are those persons or entities who or which have transactions with the Philippine Government, or any of its branches or agencies as contractors or have rendered services, and such payment is in consideration for such services rendered. Furthermore, said purchases of gasoline, diesel and oil are not transactions subject to contractor's tax, hence, the 3% tax should not be withheld. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."