Exemption from Tax on Gross Philippine Billings and Common Carrier's Tax of a Panamanian Corporation

December 15, 1987 BIR RULING NO. 401-87 24 173 00-75 401-87 Gentlemen : This refers to your letter dated November 2, 1987 requesting confirmation of your opinion to the effect that your client, Federal Transport Company, Inc. is not subject to the 2 % tax on gross Philippine billings and to the 3% common carrier's tax. It is represented that your client is a Panamanian corporation presently engaged in the business of transporting cargo of third parties from the Philippines, that it has been paying the 2 % tax on its gross Philippine billings and the 3% common carrier's tax; that your client is now intending to purchase fresh fruits from the Philippines and shall thereafter be carrying cargo for its own account, and that it shall cease to carry cargo for any third party. In reply thereto, please be informed that your opinion is hereby confirmed. Considering that your client will be carrying cargo solely for its own account and shall cease to carry cargo for any third party, it is not subject to the 2 % income tax on gross Philippine billings imposed by Section 24(b)(2)(i) of the Tax Code as it cannot derive income in carrying its own cargo. It cannot also be subject to the 3% common carrier's tax imposed by Section 173 of the same Code as it cannot be a carrier for its own cargo. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner