3% Common Carrier's Tax Imposed on an American Flag Vessel

September 7, 1988 BIR RULING NO. 435-88 25 (a) (2) 115 000-00 435-88 Gentlemen : This refers to your letter dated August 23, 1988 requesting that the vessel MV "Lawrence H. Gianella", an American flag vessel, be exempted from income and common carrier's taxes. It is represented that the said vessel is under the control of Military Sealift Command, Subic Bay, and is expected to arrive at Limay, Bataan from Chimuwan to load approximately 200M BBLS DFM Cargo (Naval Distillate Fuel); that after completion of the loading, the vessel will sail for Subic under Orders of U.S. Navy Military Sealift command for the discharging of the above cargo. In reply, please be informed that inasmuch as there is no showing that the carrying of the cargo is undertaken by virtue of a contract with the Base authorities within the purview of the RP-US Military Base Agreement, the revenue to be derived by the foreign owners of the above vessel is subject to the 3% common carrier's tax imposed by Section 115 of the Tax Code, as amended by Executive Order No. 273. Moreover, said revenue is subject to the 2 1/2% income tax imposed by Section 25(a)(2) of the same Code. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner