Whether the Withholding the 1% Tax by Customers from their Payments as Supplier of Goods is in Order

September 20, 1994 BIR RULING NO. 141-94 50 (b) 000-00 141-94 Concepcion Industries, Inc. 308 Sen. Gil J. Puyat Extension Makati, Metro Manila Attention: Mr . Raul T . Concepcion Chairman & Chief Executive Officer Gentlemen : This refers to your faxed letter dated August 23, 1994 stating that your customers are already withholding the 1% tax from their payments to you as supplier of goods; that since you belong to the top 1,000 corporations, you would like to get assurance from this Office that the withholding of the tax is in order; and that in the event that the taxes are not remitted to the BIR, your company will not be held responsible for non-remittance. cdti In reply thereto, please be informed that Section 1 of Revenue Regulations No. 12-94 amending Section 1 of Revenue Regulations No. 6-85 as amended otherwise known as the Expanded Withholding Tax Regulations provides that income payments made by any of the top five thousand (5,000) corporations, as determined by the Commissioner of Internal Revenue, to their local suppliers of goods shall be subject to a creditable expanded withholding tax of one percent (1%). [Sec. 1(n), RR 6-85 as amended] Under Revenue Memorandum Circular No. 28-94 amplifying and clarifying the provision of Section 1(n) of RR No. 6-85 as amended by RR No. 12-94 provides that the term "local suppliers of goods" pertains to a supplier from whom any of the top 5,000 corporations, as determined by the Commissioner, regularly makes its purchases of goods, i.e., tangible personal property. As a general rule, the term does not include a casual purchase of goods, i.e., not from regular suppliers and oftentimes involving single purchases, unless the amount of purchase, at any one time, involves P100,000.00 or more, in which case, such purchase of goods shall be subject to the withholding tax. In other words, in order that income payments to you will be subject to the one percent (1%) creditable withholding tax, your customers must be among the top five thousand (5,000) corporations, as determined by the Commissioner, and who regularly make their purchases of goods from you. Income payments to you by your customers who are among the top 5,000 corporations arising from casual purchase or single purchase of goods and the amount of purchase at any one time does not exceed P100,000.00 are not subject to the creditable withholding tax. However if the casual purchase or single purchase of goods from you by your customers belonging to the top 5,000 corporations at any one time involves P100,000 or more, then such purchase of goods from you shall be subject to the creditable withholding tax. cdtech Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue