Congress enacts a law imposing a 5% tax on the gross receipts of common carriers. The law does not define the term “gross receipts”. Express Transport, Inc., a bus company plying the Manila-Baguio route, has time deposits with ABC Bank. In 2005, Express Transport earned P1 Million interest, after deducting the 20% final withholding tax from its time deposits with the bank. The BIR wants to collect a 5% gross receipts tax on the interest income of Express Transport without deducting the 20% final withholding tax. Is the BIR correct? Explain. 5%
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Yes. The term "Gross Receipts" is broad enough to include income
constructively received by the taxpayer. The amount withheld is
paid to the government on its behalf, in satisfaction of withholding
taxes. The fact that it did not actually receive the amount does not
alter the fact that it is remitted in satisfaction of its tax obligations.
Since the income withheld is an income owned by Express
Transport, the same forms part of its gross receipts (CIR v.
Solidbank Corp., G.R. No. 148191, November 25, 2003).
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