BIR Ruling No. 042-64

June 3, 1964 BIR RULING NO. 042-64 Messrs. Engracia and Esmilla Attorneys-at-Law R. 306 and 308 Natividad Bldg. Manila Gentlemen : This has reference to your letter dated October 10, 1963 requesting opinion on the question of whether or not the commissions earned by a local real estate broker under the following facts are subject to the percentage tax. LLphil "a) The broker is duly licensed real estate broker in the Philippines. "b) The broker sells lots located in Florida, U.S.A. on installment basis. "c) A contract to sell is signed by the buyer here in Manila and same is sent back to Florida for the signature of the Company's official. The contract to sell is consummated in Florida, U.S.A. "d) The down payment and monthly installments are paid in dollars to be remitted directly to the subdivision owners in Florida, U.S.A. by the lot buyers. "e) The commission of the broker is paid in dollars by the subdivision owners in Florida and the dollar check is sent to the broker by mail in Manila." In reply thereto, I have the honor to inform you as follows: A real estate broker is one who for another, and for compensation, sells real estate or interests therein. (Section 194(s), Tax Code) From the facts presented by you, it is clear that the broker in question falls within the purview of the definition and, therefore, the commissions earned by him from the sales of the subdivision lots, even if located outside of the Philippines, are subject to the 6% percentage tax prescribed by Section 195 of the Tax Code. The fact that the property subject of the brokerage transaction is located in the United States is not of any moment because in the imposition of the broker's tax, the criterion is not where the property is located but where the brokerage act is performed, which, in the instant case, is performed in the Philippines. The instant case is not any different from the case of a local broker who solicits local buyers of the products of foreign suppliers. LLjur Very truly yours, (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue