Sub-agency Payments for Rendering Vessel Attendance Services Not Subject to Expanded Withholding Tax

December 5, 1994 BIR RULING NO. 164-94 50 (b) 000-00 164-94 New Filipino Maritime Agencies, Inc. Suite 602 L & S Building 1414 Roxas Boulevard Manila Attention: Mrs . Merlinda C . Velasco Chief Comptroller Gentlemen : This refers to your letter dated June 30, 1994, stating that you are a company which acts as husbanding agent for vessels owned/operated by your foreign Principals during their call in Philippine ports; that your vessel attendance is paid through incoming US$ remittance converted to Philippine peso; that you also act as sub-agent for domestic Principals appointed as Main Agents by their foreign Principals; and that for rendering vessel attendance services, you bill your domestic Principals sub-agency fees. Based on the foregoing representation, you are requesting a ruling as to whether or not you are subject to the 1% expanded withholding tax on the sub-agency fees paid by your domestic Principals. In reply, please be informed that under Revenue Regulations No. 6-85, as amended, implementing Section 50(b) of the Tax Code, as amended, payments only to persons enumerated therein are subject to the expanded withholding tax. Considering that payments for rendering vessel attendance services are not among those specified in said Regulations, such payments are not subject to the expanded withholding tax. However, since the aforesaid payments are not subject to withholding tax, the payor shall render an information return on such payments pursuant to Section 61 of the Tax Code, as amended by Batas Pambansa Blg. 135 and as implemented by Section 21 of Revenue Regulations No. 1-82 dated March 18, 1982. LibLex Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue