Rate of Tax Imposable on Charter Fees Derived by Non-Resident Owners of Vessels

November 16, 1989 BIR RULING NO. 229-89 25 (b) (3) 000-00 229-89 Gentlemen : This refers to your letter dated June 19, 1989 requesting in effect a ruling on the rate of tax imposable under the Tax Code on charter fees derived by non-resident owners of vessels chartered by Philippine nationals in case the charter or lease was not registered with the Maritime Industry Authority (MARINA). cdta In reply, please be informed that under Section 25(b)(3) of the Tax Code, as amended, rentals, lease and charter fees derived by non-resident owners of vessels chartered by Philippine nationals and which charter or lease has been duly approved by the Maritime Industry Authority shall be subject to a 4.5% tax. It is noted that under the said provision, the preferential rate of 4.5% tax could be imposed if the following conditions are met: (1) that a non-resident owner of vessel chartered by a Philippine national derived rentals, lease or charter fees as a consequence thereof and (2) that the charter or lease which gave rise to such rentals, lease or charter fees has been duly approved by the Maritime Industry Authority (MARINA). cd i Such being the case, and since you are referring to charter fees derived by non-resident owners of vessels chartered by Philippine nationals wherein the charter or lease was not registered with the Maritime Industry Authority (MARINA), the rate of tax imposable under the Tax Code on said charter fees is, therefore, that imposed under Section 25(b)(1) of said Code, which is 35% based on gross income received during each taxable year. Very truly yours, (SGD.) VICTOR A. DEOFERIO, JR. Deputy Commissioner