BIR Ruling No. 048-82

March 3, 1982 BIR RULING NO. 048-82 53-f 000-00 048-82 Mabuhay Broadcasting System, Inc. Hotel Mirador 1000 San Marcelino Street Ermita, Manila Attention: Mr . Reynaldo M . de Guzman Vice-President Gentlemen : This refers to your letter dated September 14, 1981 stating that you own and operate commercial radio stations, with the sale of radio airtime as your exclusive source of revenues; that as practised in the radio broadcast industry, airtime is sold to the advertiser through advertising agencies; that in your books, the total contract value for the sale of airtime is reflected fully at 100% that when billed, the advertiser remits to you 85% of the contract price and the remaining 15% to the advertising agency as agency commission; and that this 15% is entered as commission expense in your books. You want to know if and why you are required to withhold the 3% of 15% of the commission paid to the advertising agency; or in the negative, who is obliged to withhold the tax under the expanded withholding tax system. In reply, please be informed that under the foregoing facts, your client-advertiser pays you only 85% of the contract value of the sale of airtime and that it pays the remaining 15% directly to the advertising agency. Accordingly, said client advertiser is the party in custody of the payments and, therefore, constituted as the withholding agent to withhold the 3% tax on 15% of the gross commissions paid to the advertising agency, prescribed under Section 1(e)(2)(g) of Revenue Regulations No. 13-78 as amended by Revenue Regulations No. 6-79, both implementing Section 53(f) of the Tax Code, as amended by P.D. No. 1351. aisadc Very truly yours, RUBEN B. ANCHETA Acting Commissioner