Commissions Paid to Non-Salaried Account Executives

December 19, 1988 BIR RULING NO. 589-88 50 (b) 367-87 589-88 Gentlemen : This refers to your letter dated August 10, 1988 requesting in effect a ruling whether you ought to return to your non-salaried Account Executives the expanded withholding tax you have deducted from their commissions; and in the affirmative, that whatever you have remitted to this Office as expanded withholding tax in connection therewith be instead credited to your future remittances on withholding tax on wages. cdt It is represented that the claim of your Account Executives stemmed from what they have read from Tax Clinic/The Economy relative to BIR Ruling No. 367-87 dated November 19, 1987; and that you have already remitted to our Makati Office the abovementioned tax withheld from them for the period from January to May, 1988. In reply, please be informed that commissions which are not subject to liquidation paid by you to your non-salaried Account Executives are not subject to the expanded withholding tax prescribed in Revenue Regulations No. 6-85 nor to the withholding tax on wages under Section 71 (formerly Section 81) of the Tax Code, as amended. However, said payments form part of the taxable income of your non-salaried Account Executives subject to tax under Section 21 of the Tax Code. (BIR Ruling No. 367-87) Accordingly, your non-salaried Account Executives are entitled to a refund from you of the amount withheld from their commissions which has not as yet been remitted to this Office. Moreover, under Section 10 of the Revenue Regulations No. 6-85 claims for Tax Credit or refund of income tax deducted and withheld on income payments shall be given due course only when it is shown on the return that the income payment received was declared as part of the gross income and the fact of withholding is established by a copy of the statement duly issued by the payor to the payee (BIR Forms No. 1743.1) showing the amount paid and the amount of tax withheld therefrom. Such being the case, your request for tax credit cannot as yet be acted upon in view of the said requirements. cdta Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner