When Agent of a Non-resident Foreign Steamship Principal may Withhold Tax

January 5, 1983 BIR RULING NO. 002-83 This refers to your letter dated December 1, 1982 requesting a ruling on the following queries: "Are non-resident employers specifically foreign steamship principals, who recruit Filipino seamen for their vessels through an agent in the Philippines considered resident employer subject to withhold taxes thru their agent? "If the foreign shipping companies whose vessels do not call in the Philippines but are manned by Philippine crew and which our principal remit 70% of their vessels wages to the respective allottees in the Philippines thru back remittances and remaining 30% and other compensation, such as overtime and allowance are being paid on board vessels, are we as agents for non-resident corporation required to withhold taxes on the seamen's earnings which are earned on services rendered outside the Philippines?" In reply, please be informed that every employer or person who pays or who has the control, receipt, custody, disposal or payment of compensation paid to and received by citizens of the Philippines for services performed outside of the country irrespective of the number of days of such service during the calendar year shall deduct and withhold income tax due thereon in accordance with Section 7.II.b of Revenue Regulations No. 6-82 dated October 1, 1982 implementing Section 21(f) of the Tax Code as amended by B.P Blg. 135. Accordingly, if as represented, the agent of a non-resident foreign steamship principal, does not have the control, receipt, custody or disposal, of the payment of such compensation, nor does the agent pay said compensation, but merely recruits Filipino seamen for said principal, the agent is not required to withhold the tax thereon. cdti However, it is hereby understood that if the agent shall actually have control, receipt, custody or disposal of the payment of the compensation or shall actually make payment in behalf of the foreign principal, then such agent shall withhold the tax. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue