BIR Ruling No. 022-83

February 15, 1983 BIR RULING NO. 022-83 Gentlemen : In reply to your letter dated December 10, 1982, I have the honor to inform you that pursuant to Section 4(a) of Revenue Regulations No. 13-78, as amended by Revenue Regulations No. 6-79, implementing Section 53(f) of the Tax Code as amended by P.D. No. 1351, the expanded withholding tax shall not apply to income payment to the national government and its instrumentalities, including provincial, city or municipal governments, as well as government-owned or controlled corporations. Consequently, as a government agency, the rental payments made to you by the lessee-stallholders of the Maharlika Livelihood Center, a project of the Human Settlements Development Corporation (HSDC) are not subject to the expanded withholding tax. However, Section 23 of Presidential Decree No. 1177, otherwise, known as the Budget Reform Decree, requires all units of government including government-owned and controlled corporation to pay income taxes, customs duties and other taxes and fees as are imposed under revenue laws. (See Opinion No. 133, s. 1977, Secretary of Justice). Accordingly, the HSDC is subject to income tax. Being a government agency, the HSDC is entitled to either a tax subsidy or payments constituting equity contributions, in which case, it shall not be required to pay cash or its equivalent. The revenue collecting agencies shall instead issue a "Payment Compliance Certificate" indicating the nature of the assessment and amount due. The subsidy or equity contributions shall be effected through journal vouchers or their equivalent. (See paragraphs 4, 6 and 9, Finance Circular No. 2-78 implementing Section 23, P.D. No. 1177). aisadc Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue