BIR Ruling

February 11, 1970 2nd Indorsement Returned to the Regional Director, Revenue Region No. 1, Baguio City, the attached letter dated September 19, 1969, of Mrs. Gertrudes R. Masadao in behalf of her client, Mr. Joseph K. Icard protesting against the proposed assessment of the 6% percentage tax as a stockbroker. acd It is represented in the letter of protest that the taxpayer is not a stockbroker but a mere business agent and, therefore, not liable for the payment of the 6% broker's tax prescribed in Section 195 of the Tax Code. It is contended that the taxpayer does not and cannot effect the sale and/or purchase of stocks but merely gathers the buyer's and seller's orders and forwards them to Manila where the transactions are finalized. It is further contended that the gross commissions from these transactions are already subjected to the 6% broker's tax before commission is given to him. Section 194(r) of the Tax Code defines stockbrokers as including all persons whose business it is, for themselves as such brokers or for other brokers, to negotiate purchases or sales of stocks, bonds, etc. . . . From the documentary evidence submitted by Mrs. Masadao, it appears that the taxpayer bought or sold shares of stocks for the account and risk of certain clients. It is, therefore, clear that the taxpayer not merely gathered the buyer's and seller's orders but actually negotiated the purchase or sale of stocks for other brokers. Hence, he is subject to the 6% broker's tax imposed in Section 195 of the Tax Code. The fact that the 6% tax has already been paid on the gross commission by the broker in Manila who actually effected the sale or purchase of the stocks does not exempt the taxpayer from the payment of the 6% broker's tax based on the commissions derived by him. cdta In view of the foregoing, this Office believes and so holds, that the taxpayer, Mr. Joseph K. Icard, is liable for the payment of the 6% broker's tax based on the gross commissions actually received by him. MISAEL P. VERA Commissioner of Internal Revenue