REVENUE MEMORANDUM CIRCULAR NO. 45-2007 issued on July 6, 2007 reiterates the mandated duty of the top 10,000 private corporations and of the government to withhold not only on their purchase of goods but also on their purchase of services pursuant to Revenue Regulations (RR) No. 2-98.

The following provisions under RR No. 2-98, as amended by RR No. 17- 2003, enunciate the withholding tax obligations that must be observed by the top 10,000 private corporations and by the government on their respective income payments, as follows:

1. Sec. 2.57.2(M) which imposes withholding tax at rates of 1% (for goods) and 2% (for services) on income payments made by the top 10,000 private corporations to their local/resident suppliers of goods and local/resident supplier of services other than those covered by other rates of withholding tax; and
2. Sec. 2.57.2(N) (as subsequently amended by RR No. 30-2003) which imposes withholding tax at rates of 1% (for goods) and 2% (for services) on income payments made by the government to its local/resident supplier of goods and local/resident supplier of services other than those covered by other rates of withholding tax.