BIR Ruling No. 168-83

September 28, 1983 BIR RULING NO. 168-83 Gentlemen : This refers to your letter dated June 21, 1983 requesting confirmation of your opinion to the effect that advances made by you for the account of your clients which are later on reimbursed by the latter do not form part of your gross receipts for purposes of the 3% contractor's tax imposed under Section 205 of the Tax Code. It appears that NAKUFREIGHT (Philippines), Inc., is a sea and air freight forwarding company which also engages in customs brokerages and trucking operations; and that as an airfreight forwarder and customs broker, it pays for the account of its clients taxes, examination and appraisal fees, collector's clearance fees, etc. which later on are billed, invoiced to, and paid by the latter. In reply, please be informed that the 3% contractor's tax imposed by Section 205 of the Tax Code as amended on gross receipts of the contractor is in the nature of an excise tax on the exercise of a privilege of selling services and/or labor. However, in making said advances for your clients which are later on reimbursed by them, you are not considered as selling services and/or labor for a fee. Accordingly, your reimbursed advances for your client's taxes, examination and appraisal fees, collector's clearance fees, etc. do not form part of your gross receipts for purposes of the 3% contractor's tax under Section 205 of the Tax Code, as amended. cdta Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue