Monthly Rental of Commercial Building Less than P500.00 Not Subject to Tax

February 19, 1982 BIR RULING NO. 041-82 53-f 000-00 041-82 The Regional Director Revenue Region No. 6-A Iloilo City S i r : This is in connection with your Ruling No. 5, Series of 1981 issued in favor of Atty. Hector P. Teodosio c/o Rico and Associates, 2nd Floor, A.F. Lopez Bldg., Iznart Street, Iloilo City, to the effect that the monthly rental of a commercial building in the amount of P400.00 and P130.00 for electricity and water or a total of P530.00 a month is subject to the 5% expanded withholding tax. Pursuant to Section 1(c) of Revenue Regulations 13-78, as amended by Revenue Regulations 6-79, implementing Section 53(f) of the Tax Code, the gross rental or other payment required to be made as a condition to the continued use or possession of property . . . which exceeds P500.00 per contract or payment whichever is greater, is subject to the 5% withholding tax. Since the rental fee for the building is less than P500.00, the same is not subject to the 5% withholding tax on rentals under the aforesaid provision of the regulations. Payment for electricity and water, which must be ascertained to be true and correct, is not considered part of the rental payment which should be subject to the 5% expanded withholding tax, because such payment is merely a reimbursement of the amount paid by the lessor. Very truly yours, RUBEN B. ANCHETA Acting Commissioner