BIR Ruling

March 31, 1967 Mr. Dominador S. Engco Rm. 207 Paramount Bldg. 434 Rosario Street, Manila S i r : This has reference to your letter dated November 16, 1966 requesting information as to the taxes to be paid by a customs broker under the following facts: cdtech "(1) "A" as a customs broker who transport goods of customers from the Customs premises to the establishment of the latter for a compensation. According to an opinion of the Secretary of Finance, dated February 10, 1947, the amount received by the customs brokers from the importers by way of trucking and labor charges should form part of his gross compensation and taxable under Section 195 of the National Internal Revenue Code, that is, 6% of the gross compensation. "(2) Supposing "A" is the owner of the delivery equipments used in transporting the goods, is the total amount received by the broker subject to 6% or will it be 6% of the gross brokerage fee and 2% on the gross amount as "Common Carrier" on the trucking fees? "(3) Supposing "A" is not the owner of the delivery equipments used but hires other trucks for the said delivery, what taxes are due from the customs broker. "(4) Is the tax due and payable on the basis of actual payments and receipts or will it be due as soon as the bills or statement of accounts is sent to the customers." In reply, I have the honor to inform you as follows: "A", being a customs broker is subject to the customs brokers' annual fixed tax of P150.00 and to the percentage tax of 6% on his gross compensation or receipts prescribed in Sections 182(A)(3)(s) and 195 of the Tax Code. Customs brokerage and transportation business are two distinct activities subject to two different taxes. The total amount received by the broker by way of brokerage fees is subject to the 6% tax and the gross receipts derived from his capacity as transportation contractor is subject to the 2% tax prescribed in Section 192 of the Tax Code, irrespective of whether he owns or hires the delivery equipments used in transporting the goods. The 6% brokers' tax prescribed in Section 195 of the Tax Code is based on the actual receipts of the broker. Accordingly, accounts which remain uncollected at the end of the month should not be declared for taxation during the month for purposes of the percentage tax. However, the said amounts should be returned for taxation and the tax due thereon paid during the month in which they are collected. cdpr Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue