Who will Pay the Broker's Tax on 50-50 Sharing of Commissions

June 28, 1987 BIR RULING NO. 158-87 174 000-00 158-87 S i r : This refers to your letter dated May 5, 1987 stating that you are a correspondent for Wolff & Co., Inc. in Davao City, that your arrangement with said company calls for a 50-50 sharing of commissions earned every month on all the buying and selling transactions of your clients; that prior to its division, Wolff & Co. pays the 7% brokers tax imposed by Section 174 of the Tax Code; that the commissions after deducting the broker's tax, are equally divided between you and Wolff & Co., and that upon distribution of your share, another 7% broker's tax is deducted therefrom and paid to this Bureau. You now request a ruling as to whether your 50% share of the commission is subject to the broker's tax. In reply, please be informed that the party primarily liable to the 7% brokers tax, is Wolff & Co. because it is the principal broker whom you represent in soliciting your clients. The 7% broker's tax is due on the gross compensation received by your principal, Wolff & Co., which compensation includes your 50% share. Consequently, upon receipt of your share, the same is no longer subject to the 7% broker's tax. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner