BIR Ruling [DA-140-97]

March 31, 1997 BIR RULING [DA-140-97] Ms. Emma N. Atienza 2324 Cal. G. cor. T. Cruz Street Gagalangin, Tondo, Manila M a d a m : This refers to your letter dated January 23, 1997 stating that you are the authorized marketing representative of Panel System Corporation, a manufacturing company which produces among others construction materials such as concrete hollow blocks and steel reinforced concrete panels; that you have no salary and you derive your income solely from your commission from the sales of the above products; that you were given 5% commission; that you were allowed an overprice wherein on such sales, the corporation withheld all taxes applicable on said over price; that you have called the attention of the Chief Accountant with respect to the excessive taxes being withheld from you but you were informed that the basis of such rate was BIR Revenue Regulations No. 13-78; that you inquired from the Revenue District Office at Port Area, Manila and you were informed that said Revenue Regulations was superseded by Revenue Regulations No. 6-85; and that based on letter G, Section 1 of the said Revenue Regulations, the amount of income tax withheld should only be five (5%) percent. In connection therewith, you now request for a ruling as to whether or not the income or commissions received by you are subject to withholding tax as commercial broker under Section 1(g) of Revenue Regulations No. 6-85. In reply thereto, I have the honor to inform you that agents and/or salesmen are commercial brokers. Accordingly, the money payments to you as agent and/or salesman in the form of commissions are subject to the 5% expanded withholding tax pursuant to Section 1(g) of Revenue Regulations No. 6-85 as amended implementing Section 50(b) of the Tax Code, otherwise known as the Expanded Withholding Tax Regulations. (BIR Ruling No. 127-91 dated June 28, 1991). cdta Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head, Revenue Executive Assistant (Legal Service)