Whether the Term "Equipment" Mentioned in RR 4-82 Includes Vehicles for Tax Exemption Purposes

May 23, 1984 BIR RULING NO. 094-84 53-f-012-84-094-84 Gentlemen : This refers to your letter dated February 9, 1984 requesting a ruling as to whether the term "equipment" mentioned in Section 1 of Revenue Regulations No. 4-82 includes vehicles for purposes of exemption from the expanded withholding tax. It is represented that on January 23, 1983, you entered into a contract with Metropolitan Waterworks and Sewerage System (MWSS), for furnishing on rental basis two hundred fifty (250) units of vehicles exclusively AUV type for the use of MWSS; and that on November 24, 1983, you again entered into another contract with MWSS for furnishing on rental basis two (2) units of Isuzu Crew Cab, 4 door type vehicles for the use of MWSS Office for Special Projects. 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 No. 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 operating or finance lease agreement beginning April 1, 1982 are 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 income derived by your enterprise from the leasing of AUV type and Isuzu Crew Cab, 4 door type vehicles is not subject to the expanded withholding tax. However, since the rental payments are not subject to withholding tax, 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