Income Payments by Government Offices on Purchases from Local Suppliers Subject to 1% Creditable Withholding Tax

September 13, 2004 BIR RULING NO. 010-04 57 000-00 Motorist's Choice Service Station J.P. Rizal St., Concepcion I Marikina City Attention: Mr. Charito Yanga Station Manager Gentlemen : This refers to your letter dated May 21, 2001 requesting for exemption from the payment of creditable withholding tax of the income payments made to you by the Municipality of Montalban on its purchase of fuel. In reply, please be informed that Section 2.57.5(N) of Revenue Regulations No. 2-98, as amended, provides that income payments, except any single purchase which is P10,000.00 and below, which are made by a government office, national or local, including government-owned or controlled corporations, on their purchases of goods from local suppliers are subject to the one percent (1%) creditable withholding tax. In view of the foregoing, the purchase of fuel by the Municipality of Montalban from your service station (except single purchase in the amount of P10,000.00 and below) shall be subject to the 1% creditable withholding tax only if the said purchases involve the amount exceeding P10,000.00. IAEcCT Please be guided accordingly. Very truly yours, (SGD.) GUILLERMO L. PARAYNO, JR. Commissioner of Internal Revenue