FWT on Rentals paid to an NRFC Non Resident Foreign Corporation

 Facts:

►  X Co., a domestic corporation, entered into a Lease Agreement with Y Co., a
non-resident American corporation, for the lease of electronic gaming
equipment.

Issue:

►  Are the rental payments made by X Co. to Y Co. subjectto the 7.5% FWT
pursuant to Section 28(B)(4) of the Tax Code?

Ruling:

►            Yes. Under Section 28(B)(4) of the Tax Code, rentals, charters and otherfees
derived by a non-resident lessor of aircraft, machineries and other equipment
shall be subject to a tax of 7.5% of gross rentals or fees. Thus, the rental
payments to be made by X Co. to Y Co. for the lease of electronic gaming
equipment are subjectto the 7.5% FWT on gross rentals

FWT on Rentals paid to an NRFC Non Resident Foreign Corporation