VAT Ruling No. 101-90

May 3, 1990 VAT RULING NO. 101-90 Telemagic Makers, Inc. No. 144 M.H. Del Pilar St. Santolan, Malabon, M.M. Thru: The Treasurer Gentlemen : This refers to the letter (dated August 7, 1989) of your counsel, G.M. Vendiola & Co., where it is represented that you are engaged in the sale of intangible property right, specifically in the buying and selling of television airtime, which had been ruled under BIR Ruling No. 397-87 and VAT Ruling No. 105-88 to be not covered by the value added tax law but whose income is subject to income tax. Based on the foregoing facts, your query is, whether or not you are covered by the Expanded Withholding Tax Law, as implemented by Revenue Regulations No. 6-85. cdta In reply, please be informed that the coverage of the Consolidated Expanded Withholding Tax Regulations is restrictive for it applies only to the kinds of income payments, enumerated in the said regulations. Since the income that you realized is from the sale of an intangible personal property right and not from a service, it is, therefore, not covered by said regulations; hence, it is not subject to the expanded withholding tax. Accordingly, your clients are not constituted as withholding agents under the said law and regulations since their income payments to you are not subject to expanded withholding tax. On the other hand, if the receipts from said sale of TV airtime in terms of 30 to 60 second on the spot commercials, correspond to the income received by a producer or distributor of television or radio shows from the advertisers, then these are subject to the 1% expanded withholding tax pursuant to Section 1(e) (2) (i) of the Revenue Regulations 6-85. Accordingly, your clients are considered as withholding agents. llcd Very truly yours, VICTOR A. DEOFERIO, JR. Deputy Commissioner