Whether Clients of Business Renting Out Construction Equipment are Allowed to Deduct 5% Withholding Tax

May 29, 1992 BIR RULING NO. 179-92 50 000-00 179-92 RAMA (ss) Industries No. 75 Lantana Street Cubao, Quezon City Attention: Ms . Aurora M . Juqueta Treasurer Gentlemen : This refers to your letter dated March 11, 1991 stating that your business is renting out construction equipment like compressors, jackhammers, generators, backhoe and crane; and that your clients deduct 5% withholding tax from the amounts they pay. Based on the foregoing, you now in effect request for a ruling on whether your clients are allowed to deduct 5% withholding tax. In reply, please be informed that pursuant to Section 1(c) of Revenue Regulations No. 6-85 (Revised and Consolidated Expanded Withholding Tax Regulations), gross rental of not less than five hundred pesos (P500.00) paid or payable for the continued use or possession of real property to which the payor or obligor has not taken or is not taking title or in which he has no equity is subject to the 5% withholding tax. Inasmuch as you are engaged in renting out construction equipment like compressors, jackhammers, generators, backhoe and crane which are considered personal properties, then you are exempt from the 5% withholding tax prescribed under Revenue Regulations No. 6-85. casia Very truly yours, JOSE U. ONG Commissioner of Internal Revenue