EWT Based on Gross Payments

May 5, 1993 BIR RULING NO. 187-93 EWT BASED ON GROSS PAYMENTS 50 (b) 000-00 187-93 Pambansang Korporasyon Sa Elektrisidad (National Power Corporation) Cor. Quezon Avenue & Agham Road Diliman, Quezon City Attention: C . A . Ranjo Manager, H . O . Disbursement Control Division This refers to your letter dated January 21, 1993, in effect, requesting clarification as to the basis of computing the 1% tax to be withheld by you from contractors in connection with their infrastructure contracts with the National Power Corporation (NPC). It appears that you based your computation on the net amount of the claim, i.e.,after the retention has been deducted on the ground that the same is not yet received by the contractor and is temporarily held by NPC; and that upon release of the retention to the contractor, you subject the same to the 1% Expanded Withholding Tax. In reply, please be informed that for purposes of the Expanded Withholding Tax, the basis of the 1% tax shall be the gross payments to the contractors whether individual or corporate (Section 1(e), Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 8-90). Hence, your manner of computing the 1% tax which is based on the net amount after deducting the retention from the gross claim per voucher of a contractor, is not correct. aisadc VICTOR A. DEOFERIO, JR. Deputy Commissioner of Internal Revenue