Exemption from Withholding Tax — Installation of Cables

December 12, 1979 BIR RULING NO. 105-79 5% withholding tax-rental payment This refers to your letter dated May 2, 1979 requesting our legal opinion on whether Section 1(c) of Revenue Regulation No. 13-78 is applicable to the following case: "A single contract of lease involving four (4) separate real properties belonging to four (4) individual owners lessers, each entitled to a monthly rental fee of P500.00 out of the P2,000 monthly payment under the contract of lease." cd In reply, I have the honor to inform you that the rental payment of P2,000.00 per month is subject to the 5% withholding tax. Section 1(c) of Revenue Regulations No. 13-78, as amended by Revenue Regulations No. 6-79 speaks of "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 . In other words, as long as the gross rental exceeds P500.00 per contract or payment, the same is subject to 5% withholding tax, even if the share of each co-owner is only P500.00 or even if it does not exceed P500.00 monthly. The lessee in this case, the Commercial Bank and Trust Company (COMTRUST), is therefore correct in deducting 5% of the gross rental payments of P2,000.00 per month from the owners-lessors pursuant to the Contract of Lease executed between the parties.