Taxability of Commissions Paid by Travel Agencies to Individual Sales Representatives

April 8, 1992 BIR RULING NO. 121-92 50 (b) 5-82 121-92 Regal Travel Services, Inc. Don Santiago Building 1344 Taft Avenue, Manila Attention: Mr . Tirso B . Reyes, Jr . Vice President/Controller Gentlemen : This refers to your letter dated November 26, 1991 requesting information on whether BIR Ruling No. 5-82 dated January 13, 1982 is still effective inspite of the provision of Section 1 (2)(g) of Revenue Regulations No. 6-85 dated May 2, 1985, amending Revenue Regulations Nos. 13-78 and 6-79 implementing P.D. No. 1351 (now Section 50 (b) of the Tax Code). In reply, I have the honor to inform you that payments made by travel agencies by way of commissions to their sales representative do not fall within the purview of income payments which are subject to the expanded withholding tax under Revenue Regulations No. 6-85, particularly, Section 1 (g) therefore stating: "(g) amounts paid to certain brokers and agents. on your payments to customs, insurance, real estate and commercial brokers and agents of professional entertainers five per centum (5%)." atdc Accordingly, we hereby confirm your opinion that commissions paid by you to the individual sales representatives are not subject to the expanded withholding tax under said regulations. However, if the sales representatives are your employees the commissions received by them shall form part of the remuneration for services rendered, subject to withholding tax on wages prescribed by Section 72, Chapter 10, Title II of the Tax Code as amended by B.P. Blg. 135 as implemented by Revenue Regulations No. 6-82 as amended. Very truly yours, VICTOR A. DEOFERIO, JR. Deputy Commissioner Officer-In-Charge