Clarification Relative to the 5% Expanded Withholding Tax on Building Rental

July 8, 1988 BIR RULING NO. 303-88 50 (b) 381-87 303-88 Gentlemen : This refers to your letter dated April 22, 1988 requesting clarification relative to the 5% expanded withholding tax on your rental of a building. It is represented that your lessor bills you on a monthly basis as your rental of a building broker-down as follows: Rental P1,849.00; Common area charges P1,118.00; and Electricity P407.37; that you deduct 5% expanded withholding tax based on your rental and the common area charges; and that your lessor informed you that the common area charges are not subject to the 5% expanded withholding tax on rental since common area charges are used to pay for the electricity of the airconditioning; security guards, janitorial services and maintenance of hallways. In reply, please be informed that the gross rental payment for the lease of real property amounting to at least P500.00 is subject to the 5% expanded withholding tax under Section 1(c) of Revenue Regulations No. 6-85 otherwise known as t h e Revised and Consolidated Expanded Withholding Tax Regulations implementing Section 50(b) of the Tax Code, as amended. Accordingly, only your monthly rental payment of P1,849.00 is subject to the 5% expanded withholding tax, since the common area charges in the amount of P1,118.00 cannot properly be considered as your payment for your continued used or possession of your leased building. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner