BIR Ruling

September 30, 1974 Commercial Equipment Corporation 242 Km. 14 South Super Highway Paraaque, Rizal Attention: Miss Rosario S . Pascua Treasurer Gentlemen : This refers to your letters dated July 11 and September 4, 1974 requesting clarification as to the application of the withholding tax law on payments of commissions, fees, etc. to outside parties made by that firm other than for salaries and wages. aisa dc It is stated in your clarificatory letter dated September 4, 1974 that some of the recipients of the commission and fees are regular salaried employees of the firm whose salaries are being subjected to withholding tax and SSS deductions; that the commission and fees given them are certain percentage of cash sales and collections for the month and are given as additional incentives to the employees; that some of the recipients of the commission are individuals who are not in a way or the other connected with the firm; and that the commissions given them are certain percentage of the sales contracted and consummated thru them. In reply, I have the honor to inform you that under the foregoing facts the commissions given to your salaried employees form part of their compensation for purposes of the withholding tax on wages as prescribed by Supplement A to the Tax Code. With regard to the commissions paid to your commission salesmen, the same are also subject to withholding. Since the payment of their commission is very irregular and without regard to any particular payroll period, they fall under the miscellaneous payroll period. cdta Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5