Payees Subject to 1% Expanded Withholding Tax as Transportation Contractors

August 16, 1988 BIR RULING NO. 395-88 50-b 000-00 395-88 Gentlemen : This refers to your letter dated May 17, 1988 requesting a ruling as to whether or not the following payees are subject to 1% expanded withholding tax as transportation contractors: "(a) an independent contractor that furnish adequate transportation and efficient personnel necessary to pick up and deliver Columbia's shipments of motion picture films, trailers and advertising accessories to and from common carriers. The contractor actually handles the outgoing and incoming shipments of Columbia's films from provincial exhibitions. "(b) individual who performs the shuttling service that is the carrying of reels of films from one theatre to another by means of bicycle, motorcycle or merely walking." "(c) Philippine Airlines and other carriers of films from abroad. Is the whole freight payments or charges due agent and carrier only subject to a tax?" In reply, please be informed as follows: (a) Pursuant to Section 1(e)(2)(e) of Revenue Regulations No. 6-85, as amended by Revenue Regulations Nos. 8-85 and 13-86, otherwise, known as the Revised and Consolidated Expanded Withholding Tax Regulations implementing Section 50(b) of the Tax Code, as amended, gross payments to transportation contractors which include common carriers for the carriage of goods and merchandise of whatever kind by land, air or water, where the gross payment by the payor to the same payee amounts to at least two thousand pesos (P2,000.00) per month, regardless of the number of shipments during the month are subject to the 1% expanded withholding tax. Accordingly, gross payments to the above independent contractor who is a transportation contractor are subject to the expanded withholding tax of 1% beginning September 1, 1986 where his gross payments amount to at least P2,000.00 per month, regardless of the number of shipments during the month. (b) Gross payments to individual who performs the shuttling services i.e., the carrying of reels of films from one theatre to another by means of bicycle, motorcycle or merely walking is not subject to the 1% expanded withholding tax. ia (c) Gross payments to the Philippine Airlines (PAL) are subject to the expanded withholding tax, since said withholding tax is creditable income tax and PAL under its charter, P.D. No. 1130, is subject to the corporate income tax or to the franchise tax, whichever is higher. However, your gross payments to other international carriers for the carriage of your films are subject to the expanded withholding tax if the payments amount to at least P2,000.00 a month, regardless of the number of shipments during the month. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner