Exemption from 3% Common Carrier's Tax and to 2 1/2% Tax on Gross Philippine Billings

August 15, 1988 BIR RULING NO. 389-88 24 401-87 389-88 Gentlemen : This refers to your letter dated June 23, 1988 requesting confirmation of your opinion to the effect that Philippine Phosphate Fertilizer Corporation (Philphos) is not subject to the 3% common carrier's tax and to the 2 1/2% tax on gross Philippine billings on your time chartered vessels to be used exclusively for the transport of your own cargo. cdt It is represented that you have entered into the following time charter arrangements: 1. Vessel/Flag MV "San George" Cyprus Flag Disponent Owner Selma Shipping Ltd. of Monrovia Charter hire US $5,500 per day Duration 30 days Trade Isabel, Leyte/Vietnam 2. Vessel/Flag MV "Central Visayas" Phil. Flag Disponent Owner Adkris Ship Management, Inc. (a local company) Charter hire US $2,600 per day Duration 30 days Trade Isabel, Leyte/Malaysia and that both time chartered vessel "MV San George" and "MV Central Visayas" will be used by you exclusively for the transport of your own cargo to Vietnam and Malaysia. In reply thereto, please be informed that your opinion is hereby confirmed. Considering that you are only a time charterer of vessels to be used by you exclusively for the transport of your own cargo from your plant in Isabel, Leyte to your foreign markets, i.e., Vietnam and Malaysia, you are not subject to the 2 1/2% tax on gross Philippine billings and to the 3% common carrier's tax under Sections 25(a)(2) and 115 both of the Tax Code, as amended. However, your payment of charter fees to Selma Shipping Ltd. of Monrovia, the non-resident owner of "MV San George", the charter or lease of which must have been duly approved by the Maritime Industry Authority is subject to a tax of 4.5% under Section 25(b)(3 of the Tax Code, as amended. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner