BIR Ruling [DA-015-06]

January 20, 2006 BIR RULING [DA-015-06] R.A. 9337; Secs. 108; 117; VAT Ruling No. 058-92 Safeway Maritime Bulkers, Inc . Seaborne Building 4205 R. Magsaysay Blvd. cor. Sociego St. Sta. Mesa, Manila Attention: Capt. Reynaldo D. Casareo President Gentlemen : This refers to your letter dated April 29, 2005 requesting for a ruling whether your business, which as represented is classified as a domestic carrier, is subject to the 10% value-added tax or to the 3% percentage tax. It appears that Safeway Maritime Bulkers, Inc . is a corporation engaged in domestic shipping with the primary purpose to carry on and engage in general coastwise shipping, ships agents, to charter for other vessel of any class, undertake, deal in, carry on, manage, develop, make contract for the business of shipping agency abroad, establish and maintain shipping services of any class and generally to carry on the business of agents, and/or charters agent for others or under any form of lawful combination with other parties, and ship-chandler business; to engage generally in coastwise maritime commerce and navigation in the carriage and transportation of passengers, freight, mails, property and products, goods and merchandise of every kind and description by water upon the oceans, seas, sounds, lakes, rivers, canals, bays, harbors and other waterways, between such ports and other ports throughout the world of foreign, by means of ships, vessels, tugs, barges, lighters, boats, hydrofoils, or other watercrafts used in the business of water transportations including the owning, purchase, sale, mortgage, lease, charter, operation, or disposition of such ships, vessels, tugs, barges, lighters, boats, hydrofoils, or other watercrafts; and that it is duly registered with the Securities and Exchange Commission under SEC Registration No. 134421 dated August 11, 1986. In reply, please be informed that as a domestic carrier engaged in the transport of goods and cargoes, you shall be subject to 10% VAT pursuant to Section 108 of the Tax Code of 1997, and to the 3% percentage tax on the transport of passengers pursuant to Section 117 of the Tax Code of 1997. (BIR Ruling No. 058-92 dated May 5, 1992) cTAaDC However, with the advent of the new law under Republic Act (RA) No. 9337, which introduced the amendments to the Tax Code of 1997, specifically on the VAT Law, sale of services rendered to vessels engaged exclusively in international shipping continues to be subject to zero rate. With regard to transport of passengers, it is now subject to 10% VAT under the said law. However, pending the lifting of the Temporary Restraining Order (TRO) issued by the Supreme Court against the implementation of RA 9337, the transport of passengers by a domestic carrier shall continue to be subject to 3% percentage tax and the transport of goods and cargoes to the 10% VAT pursuant to the directive issued by the Commissioner of Internal Revenue in accordance with Revenue Memorandum Circular No. 30-2005. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different then this ruling shall be considered null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service