BIR REVENUE MEMORANDUM CIRCULAR NO. 26-2009, May 11, 2009
REVOCATION/CANCELLATION OF BIR RR7 RULING NO. RR 7-003-876 DATED SEPTEMBER 13, 2006 ADDRESSED TO TRENDSET MANPOWER SERVICES RELATIVE TO ITS REQUEST FOR EXEMPTION FROM THE 2% CRE…
Regional Director Merlinda L. Ordoyo of Revenue Region 7, Quezon City,
to the effect that for purposes of computing the income payment subject
to two percent (2%) creditable withholding tax, on the sale of services,
the basis shall be the gross receipts, representing the contract price
on service fee rendered by Trendset Manpower Services, excluding the
amount segregated or earmarked for particular purpose, such as salaries
and other benefits.
The above-mentioned ruling is a blatant disregard of the spirit of
the law and regulations on withholding tax system, considering that
the basis of withholding tax, whether creditable or final, is the GROSS
INCOME without any qualification. It says so in many words, as it does
in Revenue Regulations No. 2-98, as amended by Revenue Regulations No.
17-2003, like Section 2.57.2 (A) on the GROSS professional, promotional
and talent fees or any other form of remuneration for the services,
among others. Besides devoid of legal basis, then Regional Director
acted beyond the scope of her delegated authority inasmuch as the issue
settled is not one of those mentioned in Revenue Memorandum Order No.
75-99 and Revenue Memorandum Circular No. 3-2001, as amended by Revenue
Memorandum Circular No. 39-2001.
In view of the foregoing, this Office hereby revokes BIR RR 7 Ruling No. RR7-003-876 dated September 13, 2006.
All other existing rulings inconsistent herewith are likewise
considered REVOKED. All concerned are hereby enjoined to be guided
accordingly and give this circular as wide a publicity as possible.
Adopted: 11 May 2009
(SGD.) SIXTO S. ESQUIVIAS IV
Commissioner of Internal Revenue