BIR Ruling

March 29, 1973 Mr. George Lai Man Laiman Travel Agency 531 San Fernando St. Binondo, Manila This refers to your letter dated June 19 and December 11, 1972 requesting a ruling as to whether your enterprise is subject to the 6% tax as broker. You stated that you a business agent acting in behalf of your customers before government offices, foreign consular offices and embassies; that you usually help some customers intending to book passage to foreign countries by plane or boat thru bonafide travel agencies; that authorized agencies usually share you their commissions upon which BIR agents require you to pay the said 6% tax although you have paid the 3% tax as a business agent; that you are not a member of the International Air Travel Association (IATA) and is not authorized to get commission from all IATA carriers but book only to IATA members as their sub-agent; and that you have paid the 6% tax from the commissions you received from non-IATA carriers. In reply thereto, I have the honor to inform you that for transacting business in behalf of your customers before government offices, the foreign consulates and embassies, you are a business agent as defined under Section 194(v) of the Tax Code. Accordingly, you are subject to the fixed annual tax of P50.00 and 3% tax on your monthly gross receipts pursuant to Sections 182(A) (1) and 191(16), respectively, both of the Tax Code, as amended. Your booking of passengers to foreign countries either by boat or plane constitutes an activity of a commercial broker as defined in Section 194(t) of the Tax Code. As such commercial broker, you are liable to the annual fixed tax of P300.00 prescribed in Section 182 (A) (3) (bb) of the same Code and your commissions are subject to the 6% tax imposed by Section 195 thereof. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue