O% VAT on Indent Commissions

March 17, 1988 BIR RULING NO. 107-88 102 (a) (2) 000-00 107-88 Gentlemen : This refers to your letter dated October 27, 1987, requesting a ruling as to whether or not indent commissions received by a branch or a subsidiary of a foreign corporation for the former's brokerage activity in the Philippines are subject to the value-added tax (VAT). It is represented that your clients are either branches or subsidiaries of multinational enterprises who act as brokerage agents of their respective head offices or affiliates abroad for the solicitation of orders from domestic companies; that orders procured in the Philippines are communicated abroad and a contract of sale is entered into between the head office or affiliates and the local buyer; and that your clients received indent commissions for such brokerage activity which are paid for in foreign currency and inwardly remitted to the Philippines. In reply, please be informed that the indent commissions received by your clients for soliciting orders from domestic companies which are paid for in foreign currency and remitted inwardly in accordance with the Central Bank Rules and Regulations are subject to the value-added tax of 0% pursuant to Section 102(a)(2) of the Tax Code as amended by Executive Order No. 273 and amplified by Section 8(4)(3) of Revenue Regulations No. 5-87. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner