Taxability of Reinsurance Commissions

May 4, 1988 BIR RULING NO. 186-88 102 000-00 186-88 M a d a m : This refers to your letter dated January 11, 1988 and 2nd Indorsement dated December 15, 1987 requesting a ruling on the query of the President of ISAP, Inc., dated December 10, 1987 as to whether reinsurance commissions constitute taxable gross receipts for purposes of the 4% (now 10% VAT) contractor's tax under Section 170 (now Sec. 102) of the National Internal Revenue Code. In reply, I have the honor to inform you that a reinsurance contract in separate and distinct from the corresponding insurance contract reinsured. Such being the case, the reinsurer's agent who is a juridical person or the broker of the insurer, is subject to value-added tax pursuant to Section 102 of the Tax Code, as amended by E.O. No. 273 and an implemented by Section 3 of Revenue Regulations No. 5-87, effective January 1, 1988. As regards a reinsurer's agent who is a natural person, he is not subject to the 10% value-added tax but to the occupation tax of P75.00 pursuant to Section 12(a) of Presidential Decree No. 231 otherwise known as the Local Tax Code. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner