Withholding Tax — Reimbursements

1979 BIR RULING NO. 061-79 Withholding tax reimbursements This refers to your letter dated February 14, 1979 requesting a ruling as to whether a mere reimbursement of expenses from your clients is still covered by Revenue Regulations No. 13-78 implementing Presidential Decree No. 1351. In your letter dated February 19, 1979, you requested information as to the rate of withholding tax applicable to your company under the said Regulations. In your letter, it is represented that your company is a registered marine cargo surveyor; that as such, the corresponding fixed tax is being paid yearly for your individual employee-surveyor; that for every supervision of general marine or liquid cargoes you undertake for the clients, you impose a "Survey Fee" based on established rate per metric ton plus cost of expenses incurred by your attending surveyors in the port like plane tickets or transportation expenses, board and lodging or per diem, overtime allowance, etc.; and that your clients were deducting the five per cent from the total amount you receive as "survey fee" plus reimbursement of actual expenses incurred by your surveyors . In reply, I have the honor to inform you that reimbursement of actual expenses being mere return of capital, does not constitute income. Accordingly, said reimbursements are not subject to the withholding tax prescribed by Revenue Regulations No. 13-78. In this connection, since you are engaged in marine cargo surveying, your income payments derived therefrom are subject to the 5% withholding tax under Section 1(b), in relation to Section 1(a)(1), of Revenue Regulations No. 13-78. cd