5% Withholding Tax — Brokerage Fee

October 22, 1981 BIR RULING NO. 202-81 053-f 132-79 202-81 Carry-on Customs Brokerage, Inc. Rm. 305 Merchants Center Bldg. Padre Faura cor. A. Mabini Streets Ermita, Metro Manila Attention: Mr . Jess S . Carreon President Gentlemen : This refers to your letter dated August 28, 1981 requesting a ruling as to whether your income from brokerage fee and trucking charges, are subject to withholding tax under Revenue Regulations No. 13-78, as amended by Revenue Regulations No. 6-79, implementing Section 53(f) of the Tax Code. It is represented that your company is engaged purely in processing and clearance of imported merchandise from the Bureau of Customs; that you derive your income from brokerage fee and trucking charges; that all other charges appearing in your statement of account such as wharfage, arrastre, customs overtime, storage charges, various customs stamps, notarial fee, ocean freight and other government charges are merely advances for and in behalf of your client and are reimbursable to you; and that one of your importer/client, the Philippine Constabulary/Integrated National Police is deducting from your statement of account or bill 8%, representing 5% withholding tax and 3% contractors tax based on your gross bills. In reply thereto, I have the honor to inform you that payments to customs brokers are among those subject to expanded withholding tax at the rate of 5% pursuant to Section 1(i) of Revenue Regulations No. 13-78, as amended by Revenue Regulations No. 6-79. Consequently, your brokerage fee shall be subject to the said 5% withholding tax. Income payments from your trucking services are not subject to the expanded withholding tax. However, said trucking charges are subject to the 2% common carrier's tax under Section 207 of the Tax Code, as amended, said tax to be withheld and paid as in this case, by the PC/INP, pursuant to Republic Act No. 1051, as implemented by Revenue Regulations No. 16-77 dated October 11, 1977. Moreover, all other charges appearing in your statement of account which are being advanced by you subject to reimbursement by your client are not considered income payments received by you subject to withholding tax. (BIR Ruling No. 061-79) cdti Very truly yours, ROMULO M. VILLA Acting Commissioner