Non-taxability of the Receipts Derived from the Sales of the Passage Tickets to Government Officials and Employees

October 22, 1958 BIR RULING NO. 644-58 The Trans World Airlines, Inc. Hotel Filipinas Dewey Boulevard, Manila Gentlemen : Reference is made to your letter of the 6th instant, requesting exemption from the withholding provisions of Republic Act No. 1051 for the following reasons: llcd "As a common carrier by air we are taxed at the rate of 2% on all our revenues derived from transporting passengers and cargo. Such tax, which is computed and based on all sales whether on cash or charge basis, is being paid to the collecting branch of the government on or before the due date. Occasionally, we sell tickets to government officials and employees billable against the government agencies under which they work. Our billings, however, primarily because of the tremendous volume of work that government offices usually handle, are being settled two or three months after. These government offices when paying their obligations insist on withholding the 2% common carrier's tax pursuant to Republic Act No. 1051. The withholding requirements of this law will result to double payment of the 2% tax since, as stated earlier, the tax is being paid by us even for charge sales on a monthly frequency." In answer thereto, I have the honor to inform you that under the aforequoted circumstances, it is indeed possible that you pay the 2% common carrier's tax on the receipts you derive from the sales of the passage tickets to government officials and employees even before the prices of such tickets are actually paid by the government office concerned. In that case, there is no more tax due and, therefore, nothing more to deduct and withhold under the provisions of Republic Act No. 1051. Accordingly, if you can prove to the government office making the payment that the amount you are collecting had already been declared by you for purposes of the aforesaid tax, no tax need any longer be deducted and withheld thereon. It is, however, regretted that your request for blanket exemption from the operation of Republic Act No. 1051 cannot be granted. Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue