Items of Expenses Reimbursable to a Management Corporation

December 9, 1959 BIR RULING NO. 622-59 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P. O. Box 589, Manila Gentlemen : Reference is made to your letter of the 7th instant, requesting information whether or not items of expenses reimbursable to a management corporation should be considered as part of its gross receipts for purposes of the 3% contractor's tax imposed in section 191 of the Tax Code. You stated that in most instances, the contract of management entered into between the managed corporation and the managing one provides that representation, traveling and other out-of-pocket expenses advance by the latter for the account and benefit of the former are subject to reimbursement. In answer thereto, I have the honor to inform you that amounts received by a management corporation in reimbursement of those advanced by it for the account and benefit of the managed corporation and which are not, in whole or in part, disguised compensation or fee do not constitute part of the gross receipts of the former and, therefore, are not subject to the aforesaid tax. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue