Tax on Cargo Vessels

June 24, 1981 BIR RULING NO. 099-81 24-b-2 207-0 000-76 099-81 New Filipino Maritime Agencies, Inc. Suites 602-603 L & S Building 1515 Roxas Boulevard, Manila Gentlemen : This refers to your letter dated April 21, 1981 requesting on behalf of your principal, Broken Hill Proprietary, Ltd. of Australia, exemption from the payment of the total of 4.5% tax on gross freight (2% carrier's tax and 2 % income tax) every time their vessels load limestone from Bohol to Australia. It is represented that your principal, Broken Hill Proprietary, Ltd. of Australia is primarily engaged in Mining and Steel making; that it owns/operates vessels primarily for the export/import of their own cargoes; that sometime in 1977 to 1979, its three vessels namely, M/V "Iron Capricorn" M/V "Iron Kerry" and M/V "Louisa" have called at the Ports of Villanueva, Cagayan de Oro and Garcia Hernandez, Bohol to load its own limestone for Australia for its use in industrial and manufacturing activities; and that being the owner/operator of the aforesaid vessels used in the carriage of its own limestone from the Philippines to Australia, Broken Hill Proprietary, Ltd. did not realize any income, as no freight payment was made or received. cdtech In reply, I have the honor to inform you that if, as represented, the Broken Hill Proprietary, Ltd. of Australia (B.H.P.) brings to the Philippines the said vessels it owns/operates for the sole purpose of picking up its own cargo which it buys from the Philippines to Australia, it cannot be subject to the 2% carriers tax as it cannot be a carrier for its own cargo. It cannot also be subject to 2.5% income tax as it cannot derive income in carrying its own cargo. It may be stated however, that should B.H.P. carry the cargo of others for a fee, it shall be subject to the carrier's and income taxes. Very truly yours, RUBEN B. ANCHETA Acting Commissioner