BIR Ruling [DA-344-00]

September 11, 2000 BIR RULING [DA-344-00] RR 2-98 076-93 Mindanao Textile Corporation Bo. Awang, Dinaig Maguindanao, Cotabato City Attention: Ms . Myleane San Gabriel Accounting Manager Gentlemen : This refers to your letter dated January 27, 2000 requesting for a ruling as to whether or not payments made to a subcontractor of garment sewing is subject to 1% expanded withholding tax. It is represented that you are a garments manufacturer and exporter; and that in the normal course of operation, you avail of the services of garments sewing and embroidery subcontractors. In reply, please be informed that under Revenue Regulations No. 2-98 (formerly Revenue Regulations No. 6-85, as amended), implementing Section 57(B) of the Tax Code of 1997, only payments to persons enumerated therein are subject to the expanded withholding tax. Considering that payments to subcontractors of garment sewing are not among those specified in said regulations, your payments to sewing and embroidery subcontractors are therefore, not subject to the creditable withholding tax. However, since the aforesaid payments are not subject to the withholding tax, you as payor shall render information to return on such payments pursuant to Section 68 (formerly Section 61) of the Tax Code of 1997. (BIR Ruling No. 076-93 dated March 1, 1993) However, you shall be subject to the corporate income tax prescribed under Section 27(A) of the Tax Code of 1997. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group