Gross Monthly Rental Payment of P5,897.00 is Subject to 5% Expanded Withholding Tax

November 25, 1987 BIR RULING NO. 381-87 51 (b) 147-84 381-87 S i r : This refers to your letter dated September 28, 1987 requesting a ruling as to whether the rental payments of Mrs. Cecilia B. Nogami to Cityland Development Corporation are subject to the expanded withholding tax. Documentary evidence submitted shows that on August 6, 1987, Mrs. Nogami entered into a contract of lease with Cityland Development Corporation of Stall No. 5, Buendia Shopping Plaza Arcade where she operates her coffee shop at a monthly rental of P5,897.00 for the first 12 months. 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, implementing Section 51(b) [formerly Section 51(f)] of the Tax Code. For this purpose, an individual payor of rentals is constituted as the withholding agent, with respect to payments made in connection with this trade or business (Section 2, Revenue Regulations No. 6-85). Such being the case, the gross monthly rental payment of P5,897.00 by Mrs. Nogami to Cityland Development Corporation is subject to the 5% expanded withholding tax which Mrs. Nogami, as the payor and withholding agent, should deduct from said monthly rental payment of P5,897.00. Moreover, pursuant to Section 9 of Revenue Regulations No. 6-85 the rental payments shall be allowed as a deduction from her gross income only if it is shown that the 5% expanded withholding tax has been paid to the Bureau of Internal Revenue. Very truly yours, (SGD.) EUFRACIO D. SANTOS Officer-in-Charge