Basis of Computing the 5% Tax To Be Withheld From Insurance Brokers

September 24, 1985 BIR RULING NO. 167-85 53 (f) 000-00 167-85 Gentlemen : This refers to your letter dated July 11, 1985 requesting clarification as to the basis of computing the 5% tax to be withheld from insurance brokers. It is represented that an insurance broker, by nature of its functions, acts as both paying and collecting agent of the assured and the insurer, respectively, in the settlement of premiums; that for such act, the insurance company pays the broker its commission; and that the broker is usually a recipient of two kinds of payment, namely, insurance premium and broker's commission. In reply, please be informed that under Section 1(g) of Revenue Regulations No. 6-85 implementing Section 53(f) of the Tax Code, otherwise known as the Revised and Consolidated Expanded Withholding Tax Regulations, gross payments to insurance brokers are subject to the 5% expanded withholding tax. For purposes of the said expanded withholding tax, the basis shall be the whole commission or compensation received by the insurance broker excluding insurance premiums which are payments due to the insurance company. aisadc Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner