Sale/Transfer of Motor Vehicles Not Subject to Creditable Withholding Tax

November 5, 1999 BIR RULING NO. 173-99 RR 2-98 000-00-173-99 Ms . Beverly Siagan-Milo Chief, Assessment Division Revenue Region No. 02 No. 69 Leonard Wood Road Baguio City M a d a m : This refers to your letter dated April 22, 1999 in effect, requesting a ruling as to whether or not the sale/transfer of motor vehicles is subject to the creditable withholding tax of 1% and 2%. cdlex You state that there are Revenue District Offices that still issue a Certificate Authorizing Registration (CAR) and collect the withholding taxes while other RDOs no longer process and issue CAR for the sale/transfer of motor vehicles; and that the Land Transportation Office still requires the presentation of Certification Authorizing Registration pursuant to the Memorandum of Agreement entered into by and between said Office and the Bureau of Internal Revenue sometime in 1987; hence, the instant request for proper and uniform procedure in that Region. In reply, please be informed that the withholding of 1% and 2% creditable income tax prescribed under Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 8-90, as further amended by Revenue Regulations No. 2-91, is no longer provided for under Sec. 2.57.2 of Revenue Regulations No. 2-98 implementing Section 57(B) of the Tax Code of 1998. Such being the case and considering that only payments made to persons enumerated therein are subject to the creditable withholding tax, payments made to the seller/owner for the sale, exchange or transfer of motor vehicle are not, therefore, subject to the creditable withholding tax. Accordingly, the presentation of a Certificate Authorizing Registration pursuant to Revenue Memorandum Circular No. 35-91 before a motor vehicle can be registered by the Land Transportation Office is no longer required. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue