BIR Ruling

July 31, 1967 Mr. Eduardo P. Marfil Certified Public Accountant 228-230 Libertad Pasay City S i r : This refers to your letter dated April 25, 1967 stating the following: llcd "For and in behalf of my client who is operating a Travel Agency, may I request for information as to the proper taxes to be paid when he: 1. Act as a sub-agent of an accredited IATA Agent of Airline companies. An IATA Agent is a duly authorized agent of International Association for Travel Agencies, who were given sole authority by the different airlines. The IATA agent gets a Seven (7%) per cent commission on ticket sales, he pays the Six (6%) per cent broker's tax. He retains the one (1%) per cent and gives the sub-agent the Six (6%) per cent. What tax will the sub-agent pay? He acted as contractor of services with the IATA Agent. Although this relation goes on without benefit of contract yet all parties comply with its obligation. 2. Act as agent of different hotels for the booking of accommodations and receive commission therefrom; 3. Conduct tours in Manila and nearby tourist spots and charge fees therefrom; 4. Receives commission from different curio and souvenir stores when tourists were brought to their souvenir shops; 5. Lease transportation equipment, maintain with driver and gasoline and oil and repairs for the same and lease for hire to tourists for a fee." LLpr In reply, I have the honor to inform you that the 6% commission received by a sub-agent of an accredited IATA Agent who had already paid the 6% broker's tax, is subject to the 6% broker's tax under Section 195 of the Tax Code. For engaging in the business activities under 2 and 3 above, your client is considered as an independent contractor, hence, subject to the annual fixed tax of P20.00 and to the 3% tax prescribed in Sections 182(A)(1) and 191 of the Tax Code. For receiving commission from different curio and souvenir stores when tourists were brought to their souvenir shops, your client is constituted as commercial broker, subject to the annual fixed tax of P150.00 and to the 6% tax imposed under Sections 182(A)(3)(s) and 195 of the Tax Code. For leasing transportation equipment, maintain with driver and gasoline and oil and repairs for the same and lease for hire for a fee, your client is a transportation contractor, subject to the annual fixed tax of P20.00 and to the 2% tax prescribed in Sections 182(A)(1) and 192 of the Tax Code. cdta Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue