Tax Liability of Real Estate Broker's

May 7, 1980 BIR RULING NO. 041-80 Eternal Gardens Memorial Ground Floor, Dominga Bldg. 162 Legaspi Village, Makati Metro Manila Attention: Mr . Gabriel O . Vida Executive Vice-President & General Manager Gentlemen : This refers to your letter dated November 9, 1979 requesting a ruling to the effect that payments of commissions to your sales counsellors are exempt from the expanded withholding tax. You have represented that your sales of memorial lots are made through your sales counsellors; that said sales counsellors are not employees of your company and are not paid any fixed allowance or salary; that they work at their own pleasure and do not observe definite working hours; that they are trained to sell memorial lots; that they sell occasionally only and are paid commissions based on the sales value of the memorial lots they sell. In reply, I have the honor to inform you that under the foregoing, facts, your sales counsellors are real estate broker's because they solicit for prospective purchasers, or negotiate the purchase of memorial lots. (Sec. 187(s), Tax Code of 1977, as amended) Accordingly, commissions paid to your sales counsellors are subject to the 5% withholding tax prescribed by Section 1(i) of Revenue Regulations No. 13-78, as amended by Revenue Regulations No. 6-79. Moreover, your sales counsellors are subject to the annual fixed tax of P1,000 and to the 6% tax on their gross compensation, pursuant to Sections 192(3)(bb) and 208 of the Tax Code of 1977, as amended. aisadc Very truly yours, RUBEN B. ANCHETA Deputy Commissioner