BIR Ruling [DA-075-06]

March 2, 2006 BIR RULING [DA-075-06] RR 6-2001; RR 17-2003 DA-052-2005 Lacson & Lacson Insurance Brokers, Inc . 15th Floor Burgundy Corporate Tower 252 Sen. Gil Puyat Avenue Makati City Attention: Mr . Salvador L . Lacson Managing Partner Gentlemen : This refers to your letter dated January 9, 2005 requesting for clarification of BIR Ruling DA-052-2005 dated February 7, 2005, to the effect that if the insurance broker requires you to pay service fee then your payment shall be subject only to the 10% withholding tax; however, if the insurance broker merely collects the premium payments in behalf of the insurance company and does not charge service fee, then your payment is subject to the 2% withholding tax. DaTICE In reply thereto, please be informed that the said ruling remains valid and subsisting. Thus, if the insurance broker charges service fee, together with the premium, then the insured must withhold only the 10% EWT on the service fee pursuant to Section 3(G) of Revenue Regulations No. 6-2001, as amended by Revenue Regulations No. 17-2003. However, if the insurance broker collects only the premiums without any service fee, then the insured which is a top 10,000 corporation will withhold only the 2% EWT pursuant to Section 3(M) of Revenue Regulations No. 17-2003, and issue the corresponding certificate (BIR Form No. 2307) in the name of the insurance company; hence, a double withholding tax is avoided. cTaDHS Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service