BIR Ruling [DA-374-04]

July 5, 2004 BIR RULING [DA-374-04] Section 24 (A) & RR 2-98 BIR Ruling No. 53-98 & DA-46-2001 Air Materiel Wing Savings and Loan Ass., Inc. AMWSLAI Bldg., cor. Boni Serrano & 18th Avenues Murphy, Cubao Quezon City Attention: Ms. Evelyn H. Castillo Deputy Chief Operating Officer Gentlemen : This refers to your letter dated November 21, 2003 requesting, in effect, for a ruling on whether or not the prizes in the amount exceeding Ten Thousand Pesos (PhP10,000.00) in your raffle are subject to the 20% withholding tax. It is represented that per DTI-NCR guideline (Permit No. 1298 Series of 2003), the prizes exceeding Ten Thousand Pesos (PhP10,000.00) for Air Materiel Wing Savings and Loan Ass., Inc. (AMWSLAI)'s Pasasalamat Raffle on December 5, 2003 are subject to the 20% withholding tax. In reply, please be informed that Section 2.57-1 of Revenue Regulations No. 2-98, as amended, implementing Section 24(A) of the Tax Code of 1997 provides that: "Sec. 2.57-1. Income Payments Subject to Final Withholding Tax . The following forms of income shall be subject to final withholding tax at the rates herein specified; (A) Income payments to a citizen or to a resident alien individual; (1) . . . prizes (except prizes amounting to ten thousand pesos (P10,000) or less which shall be subject to tax under Section 24(A) of the Code) and other winnings (except Philippine Charity Sweepstakes winnings and Lotto winnings), derived from sources within the Philippines Twenty percent (20%)." In view of the foregoing, the prizes for your Pasasalamat Raffle which are more than P10,000.00 are subject to the 20% final withholding tax whereas the prizes amounting to P10,000.00 or less shall be subject to tax under Section 24(A) of the Tax Code of 1997 (BIR Ruling No. 053-98 dated May 8, 1998 and BIR Ruling No. DA-046-01 dated March 22, 2001). ScaCEH 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, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group