Expanded Withholding Tax of 1% Imposed on Income Payments

April 19, 1988 BIR RULING NO. 150-88 50 (b) 48-86 150-88 Gentlemen : This refers to your letter dated March 9, 1988 requesting a ruling as to whether the income payments of your client, Zamboanga Wood Products, Inc. to a foreign shipowner is subject to the expanded withholding tax. It is represented that your client is engaged in the manufacture of plywood which it exports abroad, mostly to Europe; that said products are transported on foreign registered vessels on a CIF and CNF basis; and that although the vessels have agents in the Philippines, your client pays freight charges direct to the shipowner in Europe. In reply thereto, I have the honor to inform you that considering that the foreign shipowner has a local agent, gross payment made by your client to the foreign shipowner are subject to the expanded withholding tax of 1% pursuant to Section 1(e)(2)(e) of Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 8-85 otherwise known as the Revised and Consolidated Expanded Withholding Tax Regulations implementing Section 50(b) of the Tax Code, as amended. cd Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner