BIR Ruling No. 028-80

1980 BIR RULING NO. 028-80 C.F. Sharp & Company, Inc. Casa Rocha, 290 Gen. Luna Corder Aduana Intramuros, Manila Attention : Mr . C . B . Austria Vice President & Treasurer Gentlemen: This refers to your letters dated July 8, 1980 and September 9, 1980 requesting clarification on the application of the expanded withholding tax to certain payments due to you from Philippine Cities Services, Inc. (PCSI),one of your manning principals . It appears that you are the manning agent of the aforenamed corporation, procuring and enlisting for it the services of Filipino officers and crew for its vessel M/V J. ED WARREN and attending to its other various needs; that for these services you are paid manning fees; that you advance, for the account of PCSI and subject to reimbursement upon demand through a statement of account, to its officers and crew members their monthly wages and other benefits, to SSS, Medicare and ECC, its counterpart contributions as employer, and the notarization fees or pertinent documents; and that PCSI withheld certain percentages from the payments to you under the Statement of Accounts dated May 31, 1980 as withholding tax. You want to be informed on the following points: (1) Whether or not the manning fees payable to you by PCSI are subject to the expanded withholding tax; and (2) Would it be the total amount collectible as per the monthly statement of account which would be subject to withholding tax or would the withholding tax be based on the actual manning form only? In reply, please be informed as follows: (1) As a labor recruiting agency, the manning fees paid to you by PCSI are subject to the withholding tax of 3% of 15% of the gross payment thereof pursuant to Section 1 (6)(2)(m) of Revenue Regulations No. 13-78 as amended by Revenue Regulations No. 6-79, implementing Presidential Decree No. 1351. (2) Since among the items collectible by you from PCSI, the actual manning fees would comprise income payments to you, it is only said manning fees which are subject to the expanded withholding tax. The other items of payments merely constitute reimbursements for actual expenses, and are therefore not subject to withholding tax. Very truly yours, ROMULO M. VILLA Acting Commissioner