BIR Ruling No. 056-80

November 25, 1980 BIR RULING NO. 056-80 208-00 000-00 56-80 Travel Wide Associated Sales Phil., Inc. 5th Floor Ramon Magsaysay Center Roxas Blvd., Manila Attention : Mr . Rafael M . Zosa Director Operations Gentlemen: This refers to your request for a ruling as to the basis of computing the broker's percentage tax due from you as the General Sales Agent of Trans World Airlines (TWA) for the entire Philippines. Investigation conducted by this Office disclosed that when a TWA ticket is sold through a travel agent, you derive a 3% overriding commission of $5.28. The travel agent turns over to you the proceeds of the ticket sold net of its 8% normal commission of $63.12. The 3% overriding commission as well as the 8% normal commission are based on the portion of the value of the ticket which portion amounts to $179 corresponding to TWA route from San Francisco to New York. Under these facts, the amount of gross compensation for purposes of the 6% broker's tax due from you in accordance with Section 208 of the Tax Code is $5.28. The travel agent is subject to the 6% broker's tax on the 8% normal commission of $63.12. You are not subject to the broker's tax on said normal commission because under the General Sales Agreement entered between you and TWA as Carrier, the latter obligates itself to pay said normal and overriding commissions and that the normal commissions shall be paid to the travel agent (sub-agent). (See par. IV-A and IV-C of Agreement). In other words, the 8% normal commission is earmarked to the travel agent, in which case, the same does not form part of your gross compensation for broker's tax purposes. However, in the case of your direct sales of tickets to passengers or "walk-in passenger sales" which is made without the intervention of travel agent or sub-agent, and wherein you derive both the 3% overriding commission and the 8% normal commission, you are subject to the 6% broker's tax based on the total amount of said commissions. Very truly yours, RUBEN B. ANCHETA Acting Commissioner