BIR Ruling

September 15, 1972 Mozo Accounting & Taxation Services Suite 801 Enterprise Building 524 Rosario, Cor. Carvajal Binondo, Manila Attention: Mr . Manuel A . Mozo Principal Gentlemen : This refers to your letter dated August 28, 1972 requesting information as to whether or not your client has complied correctly with the provisions of the Tax Code in the payment of its annual fixed and monthly percentage tax. It is represented that your client is a company engaged in the following business activities: "1. Brokerage Department This department attends directly to the documentation, processing and clearing of goods through customs for imports, exports and interisland trade. It pays the brokers fixed tax of P50.00 (Code 03-0506) and pays the 6% tax on the gross receipts of this department as provided for in Section 195 of the National Internal Revenue Code. "2. Transportation Department This department employs in its operation trucks, trailers, tractors, forklifts, truck-mounted cranes and other equipment necessary in the handling and transporting of goods and cargoes from one place to another. It operates within Manila and suburbs and to any point in Luzon. This department is covered by a separate PTR (Code 03-0321) for which it pays P300.00 yearly and a monthly percentage tax of 2% on its gross receipts pursuant to Section 192 of the Tax Code. "3. Warehousing Department This department operates warehouses in Manila and suburbs and derives storage and warehousing fees for goods stored by customers. For this line of business the company pays a fixed tax of P50.00 (Code 03-7053) and a monthly percentage tax on its gross receipts equivalent to 3% as called' for in Section 191 of the National Internal Revenue Code. "4. Packing & crating Department This department handles the packing and crating of goods intended to be shipped over rough and long voyage. The customers avail of this service to assure that the goods being shipped will arrive at destination without breakage and without being deformed. This department pays a PTR of P50.00 (Code 03-7079) and a monthly percentage tax of 3% on its gross receipts in accordance with Section 191 of the Tax Code. cdt "5. Air Freight Department This department attends to the handling, documentation, and clearing of goods and cargoes through customs for air shipments. This department holds office at the Airport and derives income principally from commissions of airline companies. Its fixed tax of P50.00 is the same as that of the Brokerage Department (Code 03-0506) and likewise pays a monthly percentage tax of 6% on its gross receipts as required in Section 195 of the National Internal Revenue Code." In reply, I have the honor to inform you that for each of the abovementioned departments or business activities, your client is subject to the following business taxes: 1. For undertaking documentation, processing and clearing of goods through customs for imports, exports and inter-island trade, and for undertaking the handling, documentation, and clearing of cargoes through customs for air shipments and deriving income principally from commissions of airline companies, your client is considered a customs broker subject to the P300.00 annual fixed tax imposed in Section 182(A)(3)(bb) of the Tax Code and to the 6% broker's tax on its gross receipts imposed in Section 195 of the same Code. 2. For operating trucks, trailers, tractors, forklifts, truck-mounted cranes and other equipment necessary in the handling and transporting of goods and cargoes from one place to another, your client is considered a transportation contractor subject to the annual fixed tax of P50.00 prescribed in Section 182(A)(1) of the Tax Code and to the 2% tax imposed in Section 192 of the same Code. 3. For operating warehouses and charging storage and warehousing fees for goods stored by customers, your client is engaged in the business as warehouse contractor subject to the P50.00 annual fixed tax imposed in Section 182(A)(1) of the Tax Code and to the 3% tax prescribed in Section 191(15) of the same Code. 4. For undertaking the packing and crating of goods to be shipped over rough and long voyage by customers for the purpose of assuring that the goods will arrive at destination without breakage or deformation, your client is engaged in' the business as a forwarding establishment subject to the annual fixed tax of P50.00 and to the 3% tax in accordance with Sections 182(A)(1) and 191(15) both of the Tax Code. acd Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue