Final Withholding Tax of 7 ½% — Rentals of Machineries

1981 BIR RULING NO. 014-81 24-b 117-80 014-81 Law Office of A.M. Sison, Jr. and Associates 6th Floor, Rufino Building 6784 Ayala Avenue Makati, Metro Manila Gentlemen : This refers to your letter dated November 27, 1980 requesting a ruling as to the correct rate of withholding tax due from your client, URRA and Co., Ltd., on rentals of machineries being paid by it to a non-resident foreign corporation. You have represented that your client, a domestic partnership is engaged in the business, among others, of construction of all kinds of structures; that it has entered into an Equipment Lease Agreement with a non-resident corporation domiciled in HongKong for the lease of a sophisticated construction equipment, not presently available in the Philippines; and that said equipment is needed in the job of undertaking certain aspects described as "specialist post tensioning, lifting and surface finishing work" of the construction of Coca-Cola's beverage concentrate plant in Canlubang, Laguna. In reply, I have the honor to inform you that the rentals due to the HongKong firm on the lease of the above equipment are subject to a final withholding tax of 7 % pursuant to Section 24(b)(1) (vii) of the Tax Code of 1977, as amended. cdtech Very truly yours, RUBEN B. ANCHETA Acting Commissioner