10% Expanded Withholding Tax Imposed on the Monthly Allowances of Consultants

June 29, 1988 BIR RULING NO. 282-88 51 (b) 000-00 282-88 Gentlemen : This refers to your letter dated May 5, 1988 requesting a ruling as to whether or not the monthly allowances of your consultants are subject to withholding tax. It is represented that you are a government agency under the Department of Environment and Natural Resources (DENR); that you are the product of the merger of the Natural Resources Management Center (NRMC), Land Classification Teams of the Bureau of Forest Development (BFD), National Cartography Authority (NCA), and Bureau of Coast and Geodetic Survey (BCGS); that both NRMC and LC Teams of BFDD were under the DENR before the reorganization while the NCA was under the Office of the President and the BCGS under the Department of National Defense; that DENR's practice at the time was to deduct 10% of the monthly allowances of consultants (in lieu of salary) as withholding tax; and that NCA, did not withhold such amount from their consultants who were mostly retired military men. In reply, please be informed that income payments to management and technical consultants, which includes not only fees, but also per diems, allowances and any other form of income payments, are subject to the 10% expanded withholding tax under Section 1(a)(6) of Revenue Regulations No. 6-85 otherwise known as the Revised and Consolidated Expanded Withholding Tax Regulations implementing Section 50(b) of the Tax Code, as amended. Accordingly, the monthly allowances paid by you to your consultants are subject to the 10% expanded withholding tax. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner