2% Common Carrier's Tax — Evergreen Line

October 28, 1981 BIR RULING NO. 209-81 207 000-00 209-81 Bureau of National and Foreign Information CPY Bldg., Sta. Clara St. Intramuros, Manila Attention: Mr . Ahmad A . Schuck Chief Legal Officer Gentlemen : This refers to your letter dated September 2, 1981 requesting clarification on whether "shippers" are covered by the provisions of Revenue Regulations No. 6-79, otherwise known as the Expanded Withholding Tax Regulations, more particularly under Section 1(e)(2)(d) which mentions "operators of stevedoring, warehousing or forwarding establishments." cdt You represented that your Information Attache in Washington D.C. had earlier contracted a local "shipper", supposedly Don Tim Shipping Corporation (hereinafter referred to as "Don Tim"), acting as general agent for Evergreen Line, to ship her personal effects from Manila to Washington, D.C.; that your office paid said "shipper" a net total of P25,512.57 after deducting a withholding tax in the amount of P911.00 or 3% of the agreed freight charges in the amount of P26,425.57; that despite said payment, the "shipper" still refuses to release the goods until the amount deducted and withheld (P911.00) is first paid to it claiming that its income payments are not covered by the provisions of the Expanded Withholding Tax Regulations; and that in the meantime, your Attache's personal effects remain in storage in Baltimore and depreciating. In reply, please be advised that based on your representations and the documents you submitted, Don Tim is not an operator of stevedoring, warehousing or forwarding establishments nor does it fall under the category of the other payees enumerated in the Expanded Withholding Tax Regulations; hence, the same is not covered by the said regulations. However, it appearing that it is the general agent of Evergreen Line, which in our opinion is a common carrier, it therefore holds itself to the public and to the government as the shipowner's agent , that as such it is under obligation to pay for and in behalf of its principal whatever tax is due from the latter . (CIR vs. U.S. Lines Co., G.R. L-16850, May 30, 1962). It is worthy to note at this point that under Republic Act No. 1051, all bureaus of the government , among others, are mandatorily required to deduct and withhold any and all taxes due and payable the amount of which can be fixed, determined, computed or ascertained at the time of payment on account of money payments to private individuals, corporations, partnerships, and/or associations. In relation to this, Revenue Regulations No. 16-77, implementing the aforestated Republic Act, particularly Section 4(a)(5), provides that a tax of two per centum (2%) should be deducted and withheld from the income payments made to common carriers . Considering therefore that Evergreen Line, as a common carrier, is subject to the withholding tax provisions of Republic Act No. 1051, as implemented by Revenue Regulations No. 16-77, and since Don Tim, as the general agent of Evergreen Line, is under obligation to pay the 2% common carrier's tax due from the latter, it is our opinion that you, as a government entity, should deduct and withhold a tax of 2% based on the freight charges you paid, and remit the same to this Office. Very truly yours, ROMULO M. VILLA Acting Commissioner