BIR Ruling [DA-166-05]

April 14, 2005 BIR RULING [DA-166-05] Sections 109 & 118 (B) BIR Ruling No. 168-83 & 231-91 Eastern Shipping Lines, Inc. Eastern Shipping Lines Bldg. Anda Circle, Port Area Manila Attention: Ms. Celina M. Mendoza Accounting & EDP Manager Gentlemen : This refers to your letter dated January 18, 2005 requesting for a confirmatory ruling that freight receipts derived from overseas incoming cargoes are still not subject to 2% withholding tax as provided in BIR Ruling No. 108-96 dated July 11, 1986 and BIR Ruling No. 025-94 dated January 17, 1994. In reply, please be informed that pursuant to Section 2.57.2(E)(4)(e) of Revenue Regulations No. 2-98, implementing Section 57(B) of the Tax Code of 1997, gross payments to transportation contractors where the gross payment amounts to at least two thousand pesos (P2,000) per month, regardless of the number of shipments during the month, are subject to the expanded withholding tax of 2%. However, our withholding tax law shall not apply where the income payor is a non-resident individual or corporation. Moreover, freight receipts derived from incoming cargoes are not among those enumerated as subject to the expanded withholding tax under Revenue Regulations No. 2-98, as amended. TAcSaC Accordingly, we confirm your opinion that freight receipts derived from overseas incoming cargoes are still not subject to withholding tax. 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 as null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group