BIR Ruling [DA-278-04]

May 17, 2004 BIR RULING [DA-278-04] Sec. 57 (B); RR 2-98, as amended by RR 6-2001 & RR 14-2002 Santa Fe Moving and Relocation Services Phils, Inc. Unit 3, 1st Avenue Maalac, Taguig Metro Manila Attention: Mr. Arnel L. Torno Gentlemen : This refers to your letter dated March 4, 2003 addressed to our Revenue District Office (RDO) No. 044, Taguig/Pateros and which was forwarded and received by this Office on April 9, 2003 requesting for clarification regarding BIR Form 1601-E which indicates that the rate of withholding tax on income payments made by top five thousand (5,000) corporations to their local supplier is one percent (1%). You stated that the issuance of September 2001 (ENCS) pointed out that the EWT rate on income payment made by top 5000 corporations to their local supplier of goods is only 1%; that, however, the 1601-E September 2002 ENCS indicates the 2% rate; that this change prompted you to verify from the BIR RDO No. 044 for clarification; and that you were informed that there was indeed a typographical error in the printing of the form. In reply, please be informed that the applicable rate is still one percent (1%) of the income payment as provided for in Revenue Regulations (Rev. Regs.) No. 2-98, as amended by Rev. Regs. 6-2001, and as last amended by Rev. Regs. 14-2002. There has been no amendment to Rev. Regs. No. 2-98 with respect to the rate of withholding on income payments made by a top-5000 corporation to its local supplier of goods. The withholding tax rate reflected at the back side of the BIR Form 1601-E is a mere typographical error that cannot change what is provided in Revenue Regulations No. 2-98, as amended by Rev. Regs. Nos. 6-2001 and 14-2002. Accordingly, the rate of withholding tax on income payments made by the top-5000 corporations to their local suppliers of goods is one percent (1%). cHAaEC Please be guided accordingly. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group