BIR Ruling [DA-387-06]

June 23, 2006 BIR RULING [DA-387-06] Mr. Salvador L. Lacson Managing Partner 15th Floor Burgundy Corporate Tower 252 Sen. Gil Puyat Avenue Makati City S i r : This refers to your request for clarification to the effect that if the insurance broker collects insurance premium and charges 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. In reply thereto, please be informed that 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. If the insurance broker collects only the premiums without any service fee, then the insured if it is a top 10,000 corporation shall 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. Thus, a double withholding tax is avoided. Presumably, in the latter instance, the insurance company pays the service fee or commission of the insurance broker, in which case, it is the one which withholds the 10% EWT. This ruling further revokes BIR Ruling No. DA-372-2006 dated June 15, 2006. Very truly yours, (SGD.) JOSE MARIO C. BUAG Commissioner of Internal Revenue