Guzman Cruzat & Ramirez

March 14, 2007 BIR RULING [DA-154-07] 108 (A); VAT Ruling Nos. 283-88; 220-90; 036-99 Guzman Cruzat & Ramirez Unit 7L, Vernida I Condominium Amorsolo St., Legaspi Village Makati City Attention: Atty. Michael C. Ramirez Counsel Gentlemen : This refers to your letter dated February 15, 2007 requesting on behalf of your client, Joint Multiline Marketing Ventures, Inc. ("Joint Multiline"), for confirmation of your opinion that as a company engaged in the business of selling and marketing of pre-need plans as broker, it is liable to pay the value-added tax based on the commission income only and not on the basis of the whole face amount of the pre-need plans, health care benefits, memorial parks and columbary. It is represented that Joint Multiline is a company engaged primarily in the broker business of selling and marketing of Pre Need Plans, Health Care Benefits, Memorial Parks and Columbary; that in the business arrangement with its service provider (insurance companies), Joint Multiline issues official receipts to cover the whole amount for each transaction sold and thereafter it will eventually remit the amount of the premium payments in favor of the insurance company/service provider. In reply, please be informed that in the foregoing transactions, only the fee or income received by Joint Multiline from its clientele representing commission from services rendered, i.e. , selling and marketing of pre-need plans, health care benefits, memorial parks, columbary and other providers, shall be subject to the 12% VAT. It is not proper to impose the VAT based on the whole amount of the premium payments covering the pre-need plans, health care benefits, memorial parks and columbary sold since Joint Multiline is not the insurance company/service provider itself in the said transactions, but merely acts as a broker for the insurance companies/service providers. cIDHSC It shall be understood, however, that after remitting the whole amount of premiums collected to the insurance company/service provider by Joint Multiline, the insurance company/service provider shall in turn issue its invoice/receipt in favor of Joint Multiline corresponding to the amount of the premium collected and the latter will issue its invoice/receipt in favor of the insurance company/service provider corresponding to the amount of the brokerage fee it received from the insurance company/service provider. In this manner, Joint Multiline can already substantiate that it acts as a broker and receives only commission from the said sale of pre-need plans, health care benefits, memorial parks and columbary. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service