Whether Kalinisan Steam Laundry Inc., is Subject to 1% Withholding Tax at Source

February 13, 1992 BIR RULING NO. 049-92 50 (b) 000-00 049-92 Kalinisan Steam Laundry, Inc. 10 Manggahan Street, Libis Bagumbayan, Quezon City Attention: Ms . Josephine G . Marasigan Asst . Accounting Manager Gentlemen : This refers to your letter dated July 21, 1990 in effect requesting a ruling as to whether your company, Kalinisan Steam Laundry Inc., is subject to 1% withholding tax at source. You represented that your company is engaged in the business of washing and drying linens and the likes; that such service requires the use of equipment like boilers, tumble dryers, washer extractors, and other related machines to clean and sanitize; that engineering is a must in the maintenance and repair of the above-mentioned equipment, thus, you have an existing department for the maintenance of equipment and you hire licensed engineers; that per verbal inquiry with the Withholding Tax Division, you were informed that your company is subject to the 1% expanded withholding tax because your business requires engineering although not directly related to the services which you render; and that some of your customers withhold 1% from your gross collections from them while others do not. In reply, please be informed that under Revenue Regulations No. 6-85 as amended, otherwise known as the Revised and Consolidated Expanded Withholding Tax Regulations implementing Section 50(b) of the Tax Code, as amended, only payments to persons enumerated therein are subject to the expanded withholding tax. Considering that payments for washing and drying linens and maintenance of equipment used therein are not among those specified in said Regulations, such payments are not, therefore, subject to the expanded withholding tax. However, since the aforesaid payments are not subject to the withholding tax, the payor shall render information return on such payments pursuant to Section 61 (formerly Section 71) of the Tax Code, as amended by Batas Pambansa Blg. 135 and as implemented by Section 21 of Revenue Regulations No. 1-82 dated March 18, 1982. aisadc Very truly yours, JOSE U. ONG Commissioner of Internal Revenue