Correct Rate of Tax to be Withheld on Money Payments to Pre-need Agents

January 24, 1992 BIR RULING NO. 037-92 50 (b) 127-91 037-92 Ideal Pension Plans Corporation Mezzanine Flr., (Wing B) Eurasia Bldg. 6794 Ayala Ave., Makati, Metro Manila Attention: Mr . Julian J . Locsin Chairman Gentlemen : This refers to your letters dated September 24 and November 7, 1991, in effect requesting a ruling as to the correct rate of tax you should withhold on money payments to your pre-need agents. You stated that you are a pre-need company and as such you are deducting 10% expanded withholding tax from your agents' commission; that you have read in SGV & Co. Bulletin of August 31, 1991 digest of BIR Ruling No. 127-91 to the effect that agents of a company engaged in buying and selling of securities through duly licensed agents who are paid solely on commission basis are considered commercial brokers subject to the 5% expanded withholding tax; and that you are now at a loss as to whether you are correct in withholding 10% tax from your agents' commission. In reply, please be informed that as a corporation engaged in the sales and marketing of pre-need plans, you are classified as a dealer in securities by the Securities and Exchange Commission. Accordingly, if no employer-employee relationship exist between you and your agents and they are paid solely on commission basis, then they (agents) are considered as commercial brokers and their commissions are subject to the 5% expanded withholding tax pursuant to Section 1(g) of Revenue Regulations No. 6-85 implementing Section 50(b) of the Tax Code, otherwise known as the Revised and Consolidated Expanded Withholding Tax Regulations. cdta This affirms BIR Ruling No. 127-91 dated June 28, 1991. Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue