BIR Ruling [UN-026-96]

January 18, 1996 BIR RULING [UN-026-96] Equitable Card Network, Inc. Equitable Building 203 Salcedo Street, Legaspi Village Makati City Attention: Mr . Jonathan Naas AM, Accounting Gentlemen : This refers to your letter dated August 29, 1995 stating that last April, 1995, you purchased two (2) condominium units amounting to P1,000,000.00 each; that since your seller is a CREBA member, you withheld a 3% tax, presumably from the selling price; that together with your other remittances, you remitted the amount withheld to BIR Makati-East last May 5 but that due to some problem with the title, the Deed of Sale covering the said sale transaction was only forwarded by the Seller to you last August 7 which was immediately signed, notarized and corresponding documentary stamp tax was paid; that as a withholding agent, you withheld immediately the 3% tax since the said P1,000,000.00 was already a full payment for each condominium unit and that you remitted immediately to the BIR the withheld amount on the succeeding month because you did not want to be penalized for late remittance of withholding tax-at-source; that BIR Makati-South refused to issue to you the required Certificate Authorizing Registration (CAR) for the reason that the 3% tax should have been withheld only at the time the Deed of Sale was done, or should not even have withheld the said 3% tax "since there was no basis or document yet to support the withholding when the full payment was made". cdta Based on the foregoing representations, you now request for information as to whether the BIR can accept your alleged remittance of the 3% withholding tax last May 5, 1995 as an actual payment of the creditable expanded withholding tax (EWT) for the aforementioned sale of condominium units which was only documented/consummated on August 7, 1995. In reply, please be informed that pursuant to Section 3 of Revenue Regulations No. 6-85, as amended, otherwise known as the Revised and Consolidated Expanded Withholding Tax Regulations implementing Section 50(b) of the Tax Code, as amended, the obligation of the payer to deduct and withheld under the said regulations arises at the time an income which is subject to withholding under the same regulations is payable or paid. Such being the case, your alleged remittance to this Bureau of the 3% creditable withholding tax from income payments made in April, 1995 to a seller of a real property who documented/executed/signed the Deed of Sale only on August 7, 1995 can be considered as actual payment of the creditable expanded withholding tax for the aforementioned sale of condominium units. (BIR Ruling no. 50(b)-000-00-083-94 dated April 4, 1994) Accordingly, subject to confirmation that your computation of the 3% creditable withholding tax is correct, a Certificate Authorizing Registration shall be issued to you by the Revenue District Officer concerned. cdtech Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)