2-½ Tax on Gross Philippine Billings on Revenue Derived from Interline Transactions

July 22, 1988 BIR RULING NO. 352-88 25 (a) (2) (A) 000-00 352-88 Gentlemen : This refers to your letter dated June 21, 1988 requesting a ruling as to whether or not revenue derived from your interline transactions whereby you lift passengers whose tickets were issued by other carriers is subject to the 2- tax on gross Philippine billings under Section 25(a)(A) of the Tax Code. It is represented that your airline is among the international carriers doing business in the Philippines; that you pay a 3% common carrier's tax on all passengers originating from the Philippines, the basis of the computation of which is the outgoing manifest; that you also pay an income tax of 2.5% on your gross Philippine billings; and that it is your opinion that your aforesaid interline transaction is subject only to the 3% common carrier's tax. In reply thereto, I have the honor to inform you that your request is answered in the affirmative, it appearing that the revenue derived by the carrier which issued its own ticket for the passenger is paid to you as the carrier which lifted said passenger under your aforementioned interline transaction. Moreover, "Gross Philippine Billings" means gross revenue realized from uplifts of passengers anywhere in the world covered by passage documents sold in the Philippines. [Sec. 25(a)(2)(A), Tax Code] Under this provision, gross Philippine Billings of the carrier subject to tax consist of the revenue derived by it from the uplifting of passengers covered by ticket issued in the Philippines. In other words, the carrier lifting the passenger which carrier obviously derived revenue therefrom, is subject to the tax on gross Philippine billing even if the same is covered by a ticket issued by another carrier, provided that such ticket was issued in the Philippines. cdta Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner