Tax Liabilities of a Commercial Broker

September 26, 1968 BIR RULING NO. 020-68 Mr. Gelasio S. Reyes 1148 Constancia Street Sampaloc, Manila S i r : This refers to your letter dated May 2, 1968, pertinent portions of which are hereunder quoted: cdt "I was formerly an employee of Northern Motors, Inc. as a commission agent with salary, Christmas bonus, commission and other privileges. At the age of 67 I was retired. By reason of my long service with the said company, I am given the privilege to sell on commission basis as free lancer or casual agent, although I am not an employee thereof. "In selling exclusively for Northern Motors, Inc., I do not have an office, or any showroom or service shop for my customers. I am not a trader or metropolitan dealer of the Northern Motors, Inc. I do not issue any official receipts nor make out invoices of my own, but the Northern Motors, Inc. does the collection from my customers. "I have sub-agents with whom I split my commission. In case of repossession of any car or truck I sold, I have to refund the commission I have received, but my sub-agents do not. "Under the above facts, I would like to know what licenses, permits and/or taxes or fees do I have to secure and/or pay, besides the liability for income tax. If I put up signboard in my house or in the provinces, do I need to get license?" In reply, I have the honor to inform you that under the foregoing facts, you are considered a commercial broker as defined by Section 194(t) of the Tax Code, hence, you are subject to the annual fixed tax of P150.00 and to the 6% tax based on your gross compensation pursuant to Sections 182 (A)(3)(s) and 195, respectively of the same Code. The question as to whether or not you are required to get a license if you put up a signboard at your house or in the provinces, depends upon the provision of the ordinance of the place where the signboard is to be put up. Your sub-agents are also subject to the abovementioned fixed and percentage taxes. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue