Exemption from Withholding Tax — 10% Gross Income and Rental Fees

December 14, 1979 BIR RULING NO. 128-79 This refers to your letter dated April 16, 1979 requesting a ruling on a query stated as follows: "Our company is an arrastre operator at Pier 18, North Harbor, Manila. Our contract with the Philippine Ports Authority, a government entity, is to the effect that it shares 10% of our gross income in our operation at the pier. Moreover, we are also paying rental fees to the Philippine Port Authority for the lot occupied by our office building. In view of the requirements of P.D. 1351 and Revenue Regulations No. 13-78, please inform us if we should withhold the taxes due from the 10% share and rental fees we are paying to the Philippine Ports Authority." In reply, I have the honor to inform you that the 10% of your gross income as well as the rental fees which you pay the Philippine Ports Authority are exempt from withholding tax, pursuant to Section 4(a) of Revenue Regulations No. 6-79 which provides as follows: "Section 4. The withholding of tax herein prescribed shall not apply to income payments to the following: "(a) National government and its instrumentalities, including provincial, city or municipal governments, as well as government-owned or controlled corporations; . . ." cdt