BIR Ruling

June 28, 1973 United Philippine Lines, Inc. UPL Building P. O. Box 127, Manila D-400 Gentlemen : This refers to your letters dated June 8, and June 26, 1973 requesting a ruling as to the status of your tax exemption under Republic Act No. 1407, as amended. cdta It is represented that you are a domestic corporation, 100% of the capital stock of which is owned by Filipino citizens; that you are presently engaged exclusively in the overseas shipping business; that you are acting as crewing agent in the Philippines for foreign shipowners by providing their vessels with Filipino officers and crew for which you are entitled to receive agency fee of from US $350.00 up to US $500.00 a month per vessel; and that said amount represents compensation for recruiting officers and crew, attendance to their departure and repatriation, medical, SSS and Medicare requirements and payment of 60% of their salaries to the allottees. In reply, I have the honor to inform you as follows: 1. Your agency income will not affect your tax exemption under Republic Act No. 1407, as amended. Consequently, the income derived from your overseas shipping business remains exempt from income tax. However, your agency income is subject to income tax. 2. Since you are not considered the employer of the Filipino officers and crew recruited by you for foreign shipowners, you are not required to deduct withholding tax from salaries which you pay to the allottees. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR"