Independent Contractor Subject to Annual Fixed Tax of P50.00 and to the 3% Tax on Its Gross Receipts

February 22, 1972 BIR RULING NO. 003-72 Independent contractor subject to annual fixed tax of P50 . 00 and to the 3% tax on its gross receipts . Gentlemen: This refers to year letter dated January 16, 1972, requesting information whether your client, as an insurance general agent of an insurance company, is subject to occupation tax or to the contractor's tax. The facts concerning your client as well as its operations are as follows: "A. Fact about the Insurance General Agent : "1) It is a registered corporation: "2) Its primary purpose is to act as general and/or ordinary insurance agent of any life and/or non-life insurance company, and in the pursuance thereof; a) To solicit, procure, undertake, write and/or underwrite business either by itself or through duly authorized and certificated underwriters or agents that it may engage or appoint for the purpose; b) To enter into agreements of agency, representation or contract of management with any life, non-life and/or bonding corporation or entity; c) To establish and maintain district or branch office anywhere in the Philippines as may be required in furtherance of the purpose herein mentioned and to recruit, engage and appoint for itself agents or attorneys-in-fact for the performance of management and administration of its business and affairs. d) To enter into any contract with any person, juridical or natural in pursuance to obtaining insurance and/or bonding business with such person. "3) It has a Certificate of Authority from the Office the Insurance Commissioner as an insurance agent. "D. Facts About Its Operations "1) Its agent are the agents of the insurance company which the General Agent represents; "2) Insurance application solicited by the general agent are processed and approved by the insurance company; "3) Premiums or business solicited by the general agents are paid by the policy-holders directly to the insurance company or through the general agent; "4) Temporary Receipts and Official Receipts used by the General Agent to acknowledge, for and on behalf of the insurance company, receipt of premiums are controlled and issued by the insurance company; "5) The General Agent derives its earnings from commissions paid to it by the insurance company." In reply, I have the honor to inform you that under the foregoing circumstance, your client is considered an independent contractor subject to the annual fixed tax of P50.00 and to the 3% tax on its gross receipts in accordance with Section 132(A)(1) and 191 of the Tax Code, as amended by Republic Act No. 6110. A corporation which is engaged in any of the occupations enumerated in Section 182(8) of the Tax Code is not subject to the occupation tax herein prescribed, as only natural persons are liable to said tax. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue