BIR Ruling [DA-590-99]

October 7, 1999 BIR RULING [DA-590-99] Diaz Murillo Dalupan 5/F Jacinto Building Dela Rosa corner Salcedo Sts. Legaspi Village, Makati City Gentlemen : This refers to your letter dated April 26, 1999 requesting on behalf of your client, Ann Taylor Sourcing Far East Limited (ASFEL) for waiver of the payment of penalties for the late remittance of withholding taxes. It is represented that ASFEL is a newly registered representative office in the Philippines; and that in compliance with the withholding tax requirements, it withheld the 5% creditable withholding tax from its monthly rental payments but were unable to remit the same because the bank required it to submit several papers/documents such as Tax Identification Number (TIN) and Taxpayer's Record Update (TRU), etc. In reply please be informed that your request is hereby denied for lack of legal basis. The obligation to pay interests and surcharges under the Tax Code is mandatory. (Commissioner of Internal Revenue vs. Limpan Investment Corporation, L-28644 dated July 31, 1970) The surcharges and interests respectively imposed under Section 248 and 249 of the Tax Code of 1997 are just but compensation to the state for the delay in paying the tax and the concomitant use by the taxpayer of funds that rightfully should be in the hands of the government. (Central Azucarera de San Pedro vs. Court of Tax Appeals, 20 SCRA 345) (BIR Ruling No. DA-137-98 dated April 13, 1998). You are therefore requested to advise your client to remit the creditable withholding tax on its rental payments together with the corresponding interests and surcharges in case it has not yet remitted the same. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)