Non-Passage of VAT on Stamps, Demurrage and Other Miscellaneous Government Fee

October 11, 1988 BIR RULING NO. 489-88 150 (b)102 000-00 489-88 Gentlemen : This refers to your letter dated June 7, 1988 stating that you are a licensed Customs Brokerage Corporation and a VAT-registered taxpayer; that in billing your clients, you provide one column for advances and government charges such as arrastre, storage, stamps, demurrage and other miscellaneous government fees fully supported with official receipts; that another column covers gross handling and trucking charges; and that you also provide separate column for brokerage fee fixed by CAD No. 4-85 of the Bureau of Customs. Based on the foregoing facts, you request for a ruling on the following questions: 1. How much withholding tax (including expanded withholding tax) should be deducted by your client from your bills and on what amount or column will the deduction be based? 2. How much VAT can you collect from your clients and on what amount or column will it be based? In reply, please be informed as follows: 1. Pursuant to Section 1(g) of Revenue Regulations No. 6-85 otherwise known as the Revised and Consolidated Expanded Withholding Tax Regulations, gross payments to customs brokers are subject to 5% expanded withholding tax. In the instant case, the gross payments that are subject to the 5% expanded withholding tax shall include all the advances and government charges such as arrastre, storage, stamps, demurrage and other miscellaneous government fees fully supported by official receipt, as well as the gross handling and trucking charges and brokerage fees which are indicated in column I, II and III of your billing to your clients. 2. You can pass on the 10% VAT to your clients based on your gross receipts for handling and trucking charges and brokerage fee which are indicated in column II and III of your billing; but you cannot pass on said tax for arrastre and storage fees indicated in column I of your billing because the same, being earmarked and intended for payment to third persons do not form part of your gross receipts. You cannot pass on the VAT on stamps, demurrage and other miscellaneous government fee which are fully supported with official receipts and intended also for payment to third persons. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner