1979

BIR RULING NO. 061-79

Withholding tax — reimbursements

This refers to your letter dated February 14, 1979 requesting a ruling as to
whether a mere reimbursement of expenses from your clients is still covered by
Revenue Regulations No. 13-78 implementing Presidential Decree No. 1351. In your
letter dated February 19, 1979, you requested information as to the rate of
withholding tax applicable to your company under the said Regulations.

In your letter, it is represented that your company is a registered marine cargo

surveyor; that as such, the corresponding fixed tax is being paid yearly for your
individual employee-surveyor; that for every supervision of general marine or liquid
cargoes you undertake for the clients, you impose a "Survey Fee" based on
established rate per metric ton plus cost of expenses incurred by your attending
surveyors in the port like plane tickets or transportation expenses, board and lodging
or per diem, overtime allowance, etc.; and that your clients were deducting the five
per cent from the total amount you receive as "survey fee" plus reimbursement of
actual expenses incurred by your surveyors.

In reply, I have the honor to inform you that reimbursement of actual expenses
being mere return of capital, does not constitute income. Accordingly, said
reimbursements are not subject to the withholding tax prescribed by Revenue
Regulations No. 13-78.

In this connection, since you are engaged in marine cargo surveying, your
income payments derived therefrom are subject to the 5% withholding tax under
Section 1(b), in relation to Section 1(a)(1), of Revenue Regulations No. 13-78. cd

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