Deductibility of the 30% Handling Privilege Fee

April 5, 1960 BIR RULING NO. 190-60 Mr. Bienvenido G. Escasinas P.O. Box 151 Cebu City S i r : Reference is made to your letter dated February 26, 1960 stating the following: cdt "My client, SADAYA PORT SERVICE., INC., engaged in the arrastre business in Cebu City has been the exclusive hauler in the Port of Cebu in loading and unloading cargoes to and from ships operated by the Cia. Maritima. For the privilege given my client, the said shipping company asks 30% from the gross monthly receipts of my client as a handling privilege fee. The agreement between the Cia. Maritima and my client with regards to the 30% privilege fee was verbal, nonetheless, my client has been religiously paying the fee, which amounts to some thousand of pesos. My questions in this case are: 1. Is the amount paid for the handling privilege deductible for income tax purposes on the part of my client? 2. If so, will said amount be a direct deduction from the gross arrastre income to arrive at the net amount left to my client where the various operating expenses will then be deducted?" In reply, I have the honor to inform you that the so-called 30% handling privilege fee constitutes deductible expense of your client. It shall, however, constitute income to Cia. Maritima. For purposes of the 3% tax, said fee is not deductible. casia Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue