Bir Withholding On Lease Payments

[JonPalawan]

Does anyone collect withholding, to be turned over to BIR, from the amount paid for their residential lease? My lawyer is telling me that I am obligated to be the collection agent for the lessor. This lawyer originated this lease for me 5-1/2 years ago, and she now tells me for the first time of this obligation. Is BIR involved in any way, e.g., documentary stamp, with your residential leases? Of course I have more than a little concern about violating BIR requirements.

Edited March 6, 2015 by JonPalawan

[Thomas]

withholding

Oh. In other topic I answered about if the lease payer need to pay tax. In WITHHOLDING sitations, then it's still the land owner who PAY the tax, but I don't know if the lease payer can be forced to HANDLE it.  =The tax is taken from HIS money, not yours.

 

(It's some similar for employers. They WITHHOLD some tax and fees the EMPLOYED pay, but the employers HANDLE the paying.) But ODD if BIR expect others to pay for them, who has business, as land owners leasing it out have even if it's small.

[Dave Hounddriver]

Its a requirement.  If you buy a property for your gf (as an example) and lease it back from her then you might have B.I.R. knocking on your door for a gift tax on the amount you gave her and a lease tax on the amount you are supposed to be paying her each month.

 

Of course no one I know pays such a thing but if the B.I.R. comes knocking on your door then better have all  your ducks in a row.  The ONLY times I have heard of B.I.R. investigating foreigners in these kinds of situations is when someone rats them out.  So don't make enemies.

[JonPalawan]

Well, I have an enemy. I loaned my neighbor money and now she'll do anything to get out of paying me back. She has already threatened to get me in trouble with BIR, but didn't say how. Vicious woman.

Edited March 6, 2015 by JonPalawan

[Thomas]

Its a requirement.  If you buy a property for your gf (as an example) and lease it back from her then you might have B.I.R. knocking on your door for a gift tax on the amount you gave her and a lease tax on the amount you are supposed to be paying her each month.

 

Of course no one I know pays such a thing but if the B.I.R. comes knocking on your door then better have all  your ducks in a row.  The ONLY times I have heard of B.I.R. investigating foreigners in these kinds of situations is when someone rats them out.  So don't make enemies.

/Yes for a GIFT tax

/but the LEASE PAYER paying the lease tax???   That's an income for the one who GET the lease money, so why would the lease payer pay that tax??

[Dave Hounddriver]

the LEASE PAYER paying the lease tax???   That's an income for the one who GET the lease money, so why would the lease payer pay that tax??

 

Yes.  You are right Thomas.  Your gf is the one to COLLECT the lease payment from you and thus SHE is the one to pay.  Guess where she is gonna get the money?

[i am bob]

Well, I have an enemy. I loaned my neighbor money and now she'll do anything to get out of paying me back. She has already threatened to get me in trouble with BIR, but didn't say how. Vicious woman.

It would be tough to get you in trouble with BIR on hearsay - BI maybe?

[Thomas]

 

the LEASE PAYER paying the lease tax???   That's an income for the one who GET the lease money, so why would the lease payer pay that tax??

 

Yes.  You are right Thomas.  Your gf is the one to COLLECT the lease payment from you and thus SHE is the one to pay.  Guess where she is gonna get the money?

Yes. it's normal the customer PAY - TO the OWNER, who pay the tax to the tax office.    Compare : Buyers pay the VAT in "all" countries (except at private imports)

BUT the Topic starter wondered about if he as CUSTOMER has to pay TO BIR HIMSELF

My lawyer is telling me that I am obligated to be the collection agent for the lessor.

which I would find very odd IF it's true, although it wouldn't be the first time tax people/politicians are redicilous   :mocking:

 

 

Well, I have an enemy. I loaned my neighbor money and now she'll do anything to get out of paying me back. She has already threatened to get me in trouble with BIR, but didn't say how. Vicious woman.

It would be tough to get you in trouble with BIR on hearsay - BI maybe?

I suppouse BOTH for expats earning anything BIR tax.

(Property tax is local.)

 

From what I have heared of BIR, they are CRAZY. 

E g if earning e g 2 million pesos one year, but get a bad year later earning only 200 000p, then BIR demand you will have to pay tax at 2 million the bad year too, BIR asuming businesses can't get any bader years !!!  :bash:  :1 (103): 

[Thomas]

Does anyone collect withholding, to be turned over to BIR, from the amount paid for their residential lease? My lawyer is telling me that I am obligated to be the collection agent for the lessor. This lawyer originated this lease for me 5-1/2 years ago, and she now tells me for the first time of this obligation. Is BIR involved in any way, e.g., documentary stamp, with your residential leases? Of course I have more than a little concern about violating BIR requirements.

Oh! Now I have studied it.  It's DIFFERENT taxes:

1. They see leasing as a "kind of BUYING the property"! So when leasing, then BIR demand a "replacement" for the TRANSFER tax, which would have been paid if the property was SOLD. ((Such SELLING TRANSFER taxes can be negotiated if seller or buyer pay it.))

So it make SOME sence    :)   

It's corect that the lease payer pay the tax, BUT the text say it's COLLECTED and PAID to BIR by the person/company, who GET the lease pay.  If I understand corect, this is a (kind of) VAT tax and is handled as such.

So the lawyer is partly right, partly wrong...

(As I have suspected, we better ask BOTH a skilled lawyer and a skilled acountant/rax consultant before we decide solutions...) 

(No deduction possibilities concerning THIS tax, what I can see  - Edit:   For PRIVATE persons, but perhaps for businesses. I don't know the Phil VAT law.)

 

2. An OTHER tax at SAME payment:

The person/company, who GET the lease pay, pay the tax at that lease INCOME (After deductions for related relevant costs e g fees or intererests they pay, but I believe the PROPERTY tax is NOT deductable.)

 

(3.  A third tax is the Property tax for the Property OWNER, but that's NOT among what the topic starter asked about.)

 

That's how I'm interpreting it   :mocking:         BUT English isn't my first language and laws and rules texts are often hard to understand in our first language too...

Edited March 13, 2015 by Thomas

[Jack Peterson]

Of course I have more than a little concern about violating BIR requirements.

 

 

Ok now I am getting the Picture here, I have just come from a Family Argument at the big house, Mamas.

 

Seems that Some of the family are sub leasers of the main Lot and have not paid this years land tax. Mama has been sent an Order to remit for the Whole lot less the amount she paid. All the sub Leases are in various family names and are accountable to the City hall to pay this land tax, Each January. But Mama is the Actual main Lease Holder and is Therefore Ultimately Responsible for the Tax. In the Ideal World they are telling her she should collect the other parts of the land tax and pay it all together. Now where the BIR comes in is that they Asses the value Under a banding System and then give the Information of tax Applicable to each Sub Leaser, to the main Leaser, land Owners and  City Hall assessors. It seems that people who Sublet part of a main Lease are certainly unaware that they are indeed Responsible for the Collection of tax for the Sub leases and if not then City Hall will hold the Main Leaser Accountable For all the Sub leasers as well.

 

So It has taken a Family problem to help me understand this situation and I hope it will explain a few things to all. :thumbsup:

 

JP :tiphat: