Basis of a Common Carrier's Tax

December 7, 1959 BIR RULING NO. 629-59 Messrs. Arsenio Siy & Co., Inc. 506 Trade & Commerce Bldg. Juan Luna, Manila Gentlemen : Reference is made to your letter requesting opinion of this Office as follows: "A ship has been contracted under a Charter Party to load a quantity of cargo from the Philippines which freight rate have been fixed at, say, $10.75 and from which the amount of $1.25 has been stipulated to be paid by the Owners for discharging of cargo at port of destination. Since actually the basic rate to be paid is only $9.50 we wonder if the 2% tax is only applicable to the rate of $9.50 even if the cost for discharging (1.25) is stated in the contract." In answer thereto, I have the honor to inform you that, as the 2% common carrier's tax is based on the gross receipts of the common carrier or, in the present case, of the charterer, that is, on the actual receipts or amount actually received by the charterer, said tax should be based on the contract freight rate of $10.75, and not on the amount of $9.50 only. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue