BIR Ruling No. 015-83

February 9, 1983 BIR RULING NO. 015-83 Gentlemen : This refers to your letter dated August 25, 1982 requesting opinion as to whether the sales commissions paid to free lance sales persons who are not employees of your company and who derive their income from you on commission basis, are subject to the withholding tax. cdti In reply, I have the honor to inform you that under Revenue Regulations No. 13-78, as amended by Revenue Regulations No. 6-79 otherwise known as Expanded Withholding Tax Regulations, implementing Presidential Decree No. 1551, now Section 53(f) of the Tax Code, only payments to persons enumerated therein are subject to withholding tax. Consequently, since income payments due to said sales person for selling/promoting your machines are not among those specified therein, they are not subject to the expanded withholding tax. However, the commissions received by such free lance sales persons are subject to income tax under Section 21(b) of the Tax Code, as amended. Moreover, since the free lance sales persons are only subject to your control and direction merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, there is no employer-employee relationship between you and the said sales persons. Such being the case, the commissions they received from you are not wages and, therefore exempt from the withholding tax on wages prescribed in Chapter XI, Title II of the Tax Code as implemented by Revenue Regulations No. 6-82 dated October 1, 1982. Finally, since the aforesaid income payments are not subject to withholding, you shall render an information return on such payments, pursuant to Section 77 of the Tax Code as amended by Batas Pambansa Blg. 135 and as implemented by Section 21 of Revenue Regulations No. 1-82 dated March 18, 1982. cdtech Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue