Rentals Paid to Financing Companies for Leasing Trucks, Pick-Ups and Jeeps Not Subject to Expanded Withholding Tax

March 8, 1984 BIR RULING NO. 053-84 53-f-012-84-053-84 Gentlemen: This refers to your letter dated December 5, 1983 requesting a ruling on whether your monthly payments as rentals for leasing truck, pick ups and cars from financing companies are exempt from expanded withholding tax. It is represented that your company acquired thru financing companies some delivery equipment such as trucks, pick-ups and cars on lease wherein you pay monthly rentals; and that the financing companies do not want you to deduct withholding tax on said rentals. In reply, please be informed that under Revenue Regulations No. 4-82 amending Section 1(c) of Revenue Regulations No. 13-78 as amended by Revenue Regulations 6-79 implementing Section 53(f) of the Tax Code, otherwise known as Expanded Withholding Tax Regulations, income payments on lease of equipment whether under an operating or finance lease agreement beginning April 1, 1982 is exempt from the 5% expanded withholding tax. The term "equipment" mentioned in Section 1 of Revenue Regulations No. 4-82 includes vehicles. Such being the case, rental payments you made to financing companies for leasing trucks, pick-ups and jeeps are not subject to the expanded withholding tax. However, since the rental payments are not subject to withholding, the payor shall render an information return on such payments pursuant to Section 77 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. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner