Withholding Taxes Payable are Taxes Due from the Principals and Cannot be Settled and Paid by Means Accumulated Tax Credits

June 10, 1981 BIR RULING NO. 094-81 199 000-00 094-81 Sabena Mining Corporation 6th Floor, Asian Reinsurance Bldg. Gamboa cor. Salcedo Streets Legaspi Village, Makati Attention: Mr . A . N . Bolinao, Jr . Asst . Corporate Secretary Gentlemen : This refers to your letter dated February 13, 1981 requesting for authority to apply your accumulated tax credits to your withholding tax liability. It is represented that your company, a BOI-registered enterprise, has an ongoing copper operation in New Bataan, Davao del Norte; that being a BOI-registered enterprise, you are entitled to some special tax credits; that in the course of your operation since 1979, you made certain purchases from BOI-registered local suppliers which entitled you to P871,527.00 accumulated tax credits; and that you are desirous to apply these said tax credits to your withholding tax liability to help you alleviate your financial difficulties since your operation has been severely affected by torrential rains and floods in Davao since 1980. In reply, please be informed that this Office presumes that your alleged accumulated tax credits amounting to P871,527.00 are evidenced by tax credit certificates issued by the Minister of Finance. Pursuant to Section 3(j) of R.A. No. 5186, and Sec. 1(p) of the Rules and Regulations implementing the same, "tax credit" shall mean any of the credits against taxes and/or duties extended to a registered enterprise . . . evidenced by a tax credit certificate . . . which may be used by registered enterprise to pay taxes . . . to the National Government in connection with its registered operations . . . non-transferable . . . and may be used only for as long as it enjoys the benefits and incentives provided for by this Act, but may not be used so as to result, in effect, in a refund . The withholding taxes payable by you are not taxes due directly from you but from your principals. You are required to deduct and withhold the tax and, thereafter, remit the same to the Government to insure payment of the tax due from your principal. Consequently, said withholding tax cannot be settled and paid by means of your accumulated tax credits. To hold otherwise, would result in a refund. In view thereof, it is regretted that your request cannot be granted. cd Very truly yours, RUBEN B. ANCHETA Acting Commissioner