3% Common Carrier's Tax Exemption on Foreign Shipping Principals

November 24, 1988 BIR RULING NO. 560-88 115 000-00 560-88 Gentlemen : This refers to your letters dated October 18 and 26, 1988 requesting clarification as to whether you will continue to pay for the account of your foreign shipping principals the 3% common carrier's tax as per BIR Ruling No. 392-87. It appears that under said ruling, you were informed that as a corporation engaged in recruiting seamen for your foreign shipping principals, your services are subject to the value-added tax at 0% but you will continue to pay for the account of the latter the 3% common carrier's tax; and that there is a disagreement between you and the enforcement officers of this Bureau of Investigation you with regard to the said 3% common carrier's tax. In connection therewith, please be informed that the aforesaid BIR Ruling was issued on the assumption that your foreign shipping principals are doing business in the Philippines as common carriers. However, since as represented, the said foreign shipping principals are not engaged in transport business here, they are not subject to the 3% common carrier's tax imposed by Section 115 of the Tax Code, as amended. Such being the case, your query is answered in the negative. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner