BIR Ruling No. 156-84

September 12, 1984 BIR RULING NO. 156-84 53-f-048-79-156-84 Gentlemen : This refers to your letter dated September 1, 1983 requesting opinion as to whether the amount advanced by you for the City of Manila as payment for wharfage fees, arrastre charges, storage fees, demurrage and break bulb fee, is subject to the 5% withholding tax. It is represented that the City of Manila, thru Ameresco Commercial and Industrial Co., Inc., has availed of your services as broker for the release of imported slaughtering machineries; that payment of expenses, fees and charges incidental to the said importation were advanced by you subject to reimbursement by the City of Manila; that after the release of the said shipment from the Bureau of Customs, you billed the City of Manila (Veterinary Inspection Board) the amount of P52,611.45 which include payment of wharfage fees, arrastre charges, storage fees, demurrage and break bulb fee in the sum of P50,631.45; and that despite your contention that the withholding tax should be based only on the service charge, the City Treasurer of Manila deducted 5% or the sum of P2,630.57 as withholding tax from your total billing. In reply, please be informed that income payments made to you as a customs broker are subject to the 5% withholding tax pursuant to Section 1(i) of Revenue Regulations No. 13-78 as supplemented by Revenue Regulations No. 6-79 implementing Presidential Decree No. 1351. Such being the case, the withholding tax should be based on your gross income, excluding said reimbursable expenses like wharfage, arrastre, storage, handling and other similar fees. As regards your request for refund of the excess or erroneously withheld 5% tax on the aforestated reimbursable expenses of P50,631.45, equivalent to P2,531.57, you may file a written claim for refund thereof with the Appellate Division, this Office, in accordance with Section 295 of the Tax Code. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner