BIR Ruling

May 22, 1973 Botelho Maritime Agencies, Inc. 8th Floor, G. E. Antonino Bldg. 540 T. M. Kalaw St., Ermita Manila Attention: Mr . Ricardo C . Salonga Operations Manager Gentlemen : This refers to your letter dated April 5, 1973 requesting information on the following queries relative to the taxes payable by your foreign principal whose ships carry outward cargo from the Philippines, viz.: "1) Are our foreign principal subject to the payment of taxes under Sec. 192 as well as Sec. 247. "2) These two tax provisions add up to 4 %. How does it affect foreign principals insofar as filing of annual income tax returns is concerned? "3) When are these taxes due to be paid?" It is represented that as ship agent you have been paying on behalf of your foreign principals the 2% common carrier's tax based on the gross receipts under Section 192 of the Tax Code. On the other hand, Section 24(b)(2) of the Tax Code, as amended by Presidential Decree No. 69, provides that international carriers shall pay a tax of 2 % on their gross Philippine billings. In reply thereto, I have the honor to inform you as follows: 1. Your foreign principals are subject to the payment of the 2% common carrier's tax pursuant to Section 192 of the Tax Code. Said principals who are international carriers are subject to income tax of 2 % tax, pursuant to Section 24(b)(2) of the Tax Code, as amended by Presidential Decree No. 69. The former is a business tax while the latter is income tax. 2. While the business tax and the income tax adds up to 4 %, the former is based on gross receipts derived from outgoing cargo and/or passenger. The latter is based on "gross Philippine billings" which means the gross receipts derived from outgoing passenger and/or cargo including all items of gross income. Accordingly, the income tax returns to be filed in behalf of your foreign principals should declare (b) "gross Philippine billings" as defined herein and pay the 2 % tax thereon. The 2% common carrier's tax is payable within twenty (20) days after the end of each quarter (Section 183, Tax Code). The 2 % income tax on gross Philippine billings is payable upon filing the quarterly declarations within sixty (60) days after the end of each quarter, pursuant to supplement D. Title II of the Tax Code, as inserted by Presidential Decree No. 30. Very truly yours, (SGD.) CONRADO P. DIAZ Acting Commissioner of Internal Revenue