Updated Guidelines on the Appropriation and Utilization of the Twenty Percent (20%) of the Annual Internal Revenue Allotment (IRA) for Development Projects

October 8, 1958 BIR RULING NO. 636-58 The Allied Travel Agency Hotel Filipinas Dewey Blvd., Manila Gentlemen : Reference is made to your letter dated September 17, 1958, stating that as agent for different airline and shipping companies, you have 15 days only from the sale of the passage ticket within which to pay the price thereof to the transportation company. You further stated that it takes four months or more before you can collect the price of tickets sold to government offices. On the other hand, upon making payments, the government office concerned deducts and withholds "a certain percentage on the total value of tickets", which, apparently, is the 2% common carrier's tax. Under those circumstances, you request exemption from the withholding provisions of Republic Act No. 1051, as implemented by Revenue Regulations No. V-40. In answer, I have the honor to inform you that the mere fact that the tickets in question are sold through you by the transportation company does not militate against the withholding of the 2% common carrier's tax due from the latter on the price of the tickets. However, considering that percentage taxes are now payable monthly and the fact that, as alleged by you, payments for the price of tickets issued to government offices are made by the latter after the lapse of four months or more than the date of purchase thereof, and that you have to pay your principal within 15 days after the sale the price of the tickets sold regardless of whether or not you have already collected from the purchaser, it is possible that the tax due on the receipts derived from the sale of the tickets are being paid by the transportation company even before actual payment of the tickets are made to you by the government office concerned. In that case, no tax is any longer due and, therefore, there is nothing more to deduct and withhold. Accordingly, if you can prove to the government office making the payment that the amount you are collecting had already been declared by the common carrier concerned for the percentage tax, no tax need any longer be deducted and withheld thereon. Your request for blanket exemption from the operation of Republic Act No. 1051 has, therefore, to be, as it is hereby, denied. prll Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue