VAT Imposed on the Commission Received by an Insurance Agency from an Insurance Company

September 15, 1988 BIR RULING NO. 448-88 102 (a) 000-00 448-88 Gentlemen : In reply to your letter dated August 2, 1988, please be informed that a commission received by an insurance agency from an insurance company is subject to the value-added tax pursuant to Section 102(a) of the Tax Code, as amended by Executive Order No. 273. It will be noted that prior to the VAT law, said insurance agency was considered an independent contractor and its earnings which consist of the commissions paid by the insurance company are the gross receipts subject to the 4% tax. (BIR Ruling No. 72-003 dated February 22, 1972) Hence, the insurance agency is engaged in the sale of service, in which case, its commissions, beginning January 1, 1988, are subject to VAT. cdt Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner