BIR Ruling [DA-314-05]

July 11, 2005 BIR RULING [DA-314-05] Broker's Gross Receipt VAT; 198-90 Ong, Ordoez & Associates, CPA's 8F, 111 Paseo de Roxas Building 111 Paseo de Roxas cor. Legazpi St., Legazpi Village Makati City Attention: Mr. Wilfred Uy Accountant Gentlemen : This refers to your letter dated June 8, 2005 requesting in behalf of your client, UTI (Global Logistics), INC. [UTI for brevity], a custom, broker/forwarder, for a confirmation that their customers who are classified under the large taxpayer group of companies should not withhold taxes from their payments to UTI for the advances it made in payment for reimbursable expenses with receipts in the name of their customers. UTI usually advance for payment of the following expenses: (1) Duties and Taxes, (2) Arrastre and Wharfage, (3) Storage, (4) Asycuda, (5) VCRC, (6) Freight (from consolidation), (7) Terminal Handling Fee, (8) Break Bulk, (9) CNIU, and (10) Chassi Rental. In reply thereto, please be informed that deposits or advance payments of the customs broker's compensation or service fee shall form part of the gross receipts for purposes of the VAT and the expanded withholding tax. However, advance payments by the customs broker for expenses such as arrastre, wharfage, form and waybills, magna scale, trucking and handling charges, documentation fee and alike, shall not form part of the broker's gross receipts if invoiced directly in the name of the broker's clients by the person performing such service and if the reimbursement to the broker is not invoiced with the broker's VAT invoice/official receipt. Advance payment for transportation, overtime and facilitation fee being expenses obviously incurred for the customs broker's benefit to facilitate the clearing of goods through customs, shall form part of the broker's gross receipts notwithstanding that the same is reimbursed by the client. (BIR Ruling No. 198-90 dated October 16, 1990) Based on the foregoing and since the above-mentioned expenses are reimbursable and receipts/invoices thereof are issued directly in the name of the customers of your client, the above expenses advanced by UTI, therefore, shall not form part of its gross receipts for purposes of the imposition of VAT and the expanded withholding tax. cSEAHa 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, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group