Compensations, Earnings, or Profits of Every Kind, Other than the Regular Commission or Brokerage

November 17, 1960 BIR RULING NO. 492-60 Messrs. Stewart, Cunanan & Co. 107 13th Street, Port Area P.O. Box 2288 M a n i l a Gentlemen : This is with reference to your letter dated June 8, 1960, wherein you requested for the opinion of this Office on the following query: cdt "A commercial broker received commissions in dollars from his suppliers abroad. These commissions are remitted each month and when received are converted into pesos by the bank, 75% at P2.00 to $1.00 and 25% at P3.20 to $1.00. "The question is: Is the premium of P1.20 on 25% of the commissions received subject to the percentage tax imposed by Section 195 of the Tax Code? It is argued that is not part of the gross compensation received as commercial broker, since the official rate is still P2.00 to $1, but windfall income from a foreign exchange transaction and therefore not subject to the 6% tax." In reply thereto, I have the honor to inform you that all compensations, earnings, or profits of every kind, other than the regular commission or brokerage, which will or are expended to accrue to the broker as a result of his intervention in the barter, purchase, sale and transfer of any goods or articles, real estate, or stocks etc. such as inside commission and gratification, shall be considered special allowance and as such as taxable. Payments made in whatever form in consideration of services rendered constitute compensation. In view of the above-mentioned consideration, this Office, is of the opinion that the so-called premium received by the commercial broker is subject to the percentage tax imposed by Record 195 of the Tax Code. cdtech Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue