BIR Ruling No. 277-15

August 24, 2015 BIR RULING NO. 277-15 National Food Authority Philippine Sugar Center Bldg., North Avenue Diliman, Quezon City Attention: Renan B. Dalisay Administrator Gentlemen : This refers to your letter dated July 9, 2015 requesting for exemption from the expanded withholding tax imposed on income payments to agricultural suppliers imposed under Revenue Regulations No. 2-98, as amended. It is represented that National Food Authority (NFA) is a government instrumentality and that pursuant to Presidential Decree No. 4, NFA is exempt from payment of income taxes. Thus exempt from the 1% expanded withholding tax imposed on its income payments to agricultural suppliers. We deny your request for lack of legal basis. Under the withholding tax system, the taxes withheld by the payor (NFA) on its income payments are intended to equal or at least approximate the tax due of the payee (agricultural supplier) on said income. The withholding tax, therefore, is a tax imposed on the payee. The payor is merely an agent of the government required to collect and remit the taxes withheld. Thus, any income tax exemption granted by law to the payor will not exempt it from the duties of a withholding agent. We hope we have enlightened you on the matter. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue