Exemption from Withholding Tax - Income Payments

May 31, 1979 BIR RULING NO. 028-79 Exemption from withholding tax income payments This refers to your letter dated December 11, 1978 requesting a ruling as to whether the income payments received by your client, Arbon Navigation Incorporated, of Pasong Tamo cor. Ponte St., Makati, Metro Manila is subject to the withholding provisions of Revenue Regulations No. 13-78, implementing Presidential Decree No. 1351. It is represented that your client, a corporation engaging in business as common carrier, has a contract with another corporation to transport the latter's products like cement, pyrit, silica sand and the like; that one of its vessels, a self-propelled barge, "M/V Arbon I", is on straight time charter contract, for which it derived fixed monthly payments; that the tugboat, "M/V Kapalaran" and the barges, "Lia II" and Lia IV", are on a "trip charter basis" for which your client derives transport fees per voyage made; and that the chartering company withholds 5% of the charter fee on the "straight time charter contract' and 3% on the "trip charter contract.' cd In reply thereto, please be informed that income payment to a common carrier is not one of those subject to the withholding provisions prescribed by Revenue Regulations No. 13-78. Accordingly, since the income payments received by your client from the charter of its tugboats and barges, represent income derived from its business as common carrier, said payments are not subject to the withholding tax.