10% VAT on Commissions Received by Corporate General Agents

September 29, 1988 BIR RULING NO. 470-88 102 (a) 103 (r) 318-88 470-88 Gentlemen : This refers to your letter dated August 24, 1988 stating that you are a VAT-registered company (Registration No. 32A-8-000283) primarily engaged in the trading of goods subject to 10% value-added tax; that aside from said main activity, you are also a General Insurance Agent deriving commissions. You are now requesting a ruling whether the commissions which you receive as Corporate General Agents are subject to the 10% value-added tax. In reply, please be informed that Section 102(a) of the Tax Code as amended by Executive Order No. 273, provides that a value-added tax equivalent to 10% shall be levied, assessed and collected on the gross receipts derived by any person engaged in the sale of services. The phrase "sale of service" means the performance of all kinds of service for others for a fee regardless of whether or not the performance thereof calls for the exercise or use of the physical or mental faculties. There is no question that as a General Insurance Agent you are performing services to others for a fee; hence, the commission which you receive as General Insurance Agent is subject to the 10% value-added tax. You do not fall within the purview of Section 103(r) of the Tax Code because your services as corporate general insurance agent are not subject to the occupation tax under the Local Tax Code and you are not a registered general professional partnership. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner