RMC No. 44-2007: Clarifies the taxability of agricultural suppliers for withholding tax purposes in respect to sales made to top 10,000 corporations and to the government in relation to Revenue Regulations No. 3-2004

Key points

1. Before RR No. 3-2004. Payments to agricultural suppliers by the top 10,000 private corporations under Section 2.57.2(M), by the government under Section 2.57.2(N), and by hotels, restaurants and other listed establishments under Section 2.57.2(S) were subject to withholding tax at the rate of 1%.
2. After RR No. 3-2004. Payments from the top 10,000 private corporations and the government remain subject to withholding tax at 1% as supplier of goods. Payments from the Section 2.57.2(S) establishments, if not covered by other withholding provisions, are not subject to withholding tax because of the suspension.
3. No exemption. Agricultural suppliers cannot claim exemption from withholding on sales to the top 10,000 private corporations or the government because of the suspension. RR No. 3-2004 did not affect their taxability for those dealings.
4. Enforcement. Internal revenue officers must check the withholding tax compliance of the top 10,000 private corporations and the government on payments to agricultural suppliers.

Who is affected

• Agricultural suppliers
• Top 10,000 private corporations
• Government as withholding agent