BIR Ruling No. 115-65

September 29, 1965 BIR RULING NO. 115-65 JOAQUIN CUNANAN & CO. Certified Public Accountants P. O. Box 2288 M a n i l a Gentlemen : Reference is made to your letter dated April 28, 1965, stating that you entered into a contract, copy of which is hereto attached, with the Bureau of Customs for the operation of the arrastre service at Poro Point, San Fernando, La Union. By virtue of said contract, you specifically quoted Section 21 of the said agreement, as follows: "21. That in consideration of the rights and privileges granted the CONTRACTOR for the management of the Arrastre Service, the BUREAU shall receive fifteen per centum (15%) of the total monthly gross income derived from whatever source in connection with the operation of the Arrastre Service, including income derived from any service whatsoever rendered by the former which is not specifically provided for herein, payable monthly within the first ten (10) days of the succeeding month. The overtime charge referred to in paragraph 16 for work actually performed by the CONTRACTOR shall form part of the total gross income, while the reimbursement of salaries and wages charged by the CONTRACTOR for the delay and/or suspension of overtime work shall not be included as part of the total gross income. The government share shall be remitted to the Bureau within the ten (10) days period with or without previous verification by the General Auditing Office, and shall be based on the total monthly gross income whether actually collected or not." You now seek the opinion of this Office whether or not the 15% share of the Government derived from arrastre service operation of said port is subject to the 3% contractor's tax. LLphil In reply thereto, I have the honor to inform that the aforementioned 15% share of the Bureau of Customs is not subject to the 3% contractor's tax because it is not a receipt received by said corporation, (Visayan Cebu Terminal Co., Inc. vs. Commissioner of Internal Revenue, G.R. No. L-19530 and L-19444, February 27, 1965) Very truly yours, (SGD.) MISAEL P. VERA Acting Commissioner of Internal Revenue