BIR Ruling [DA-351-00]

September 28, 2000 BIR RULING [DA-351-00] RR 2-98 076-93 Bonjour Garments Mfg. Corp. Brgy. G. Maderan General Mariano Alvarez, Cavite Gentlemen : This refers to your letter dated January 28, 2000 requesting for a ruling as to whether or not payments made to you as subcontractor of garment sewing is subject to 1% expanded withholding tax. It is represented that you are a company engaged in the manufacturing and exporting if garments; and that you are also providing services as a sewing subcontractor to other garment firms. 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 is not among those specified in said regulations, payments made to you for providing services as a sewing subcontractor to other garments firms is, therefore, not subject to the creditable withholding tax. However, since the aforesaid payments are not subject to the withholding tax, the payor/s shall render an information 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. HEScID Very truly yours, (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group