Tax Resources PH icon

TAX RESOURCES PH

Tax resources for Filipinos

RMC No. 09-2006: Clarifies the amount subject to VAT and Expanded Withholding Tax (Income Tax) of brokers and others similarly situated and the other parties with whom they transact business

Files
Download this file

Summary

RMC No. 9-2006 clarifies the amounts subject to VAT and Expanded Withholding Tax (EWT) of brokers and similarly situated persons, and of the other parties they transact with.

Key points

  1. Reimbursables on the broker’s VAT receipt. Reimbursable expenses and advance payments made for customers, such as arrastre, wharfage, documentation, trucking, handling charges, storage fees, duties and taxes, are subject to 10% VAT if receipted with the broker’s VAT official receipt. The same applies if they are lumped or billed with the brokerage fee in one VAT official receipt, itemized or not. Advance payments for expenses that benefit the broker also form part of gross receipts and are subject to 10% VAT.
  2. When no VAT applies to the broker. Reimbursables are not part of the broker’s gross receipts and carry no VAT if four conditions are met. They are receipted separately with NON-VAT Official Acknowledgement Receipts, the third-party provider issues receipts in the customer’s name, the broker records them under RECEIVABLE FOR CASH ADVANCES ON BEHALF OF CUSTOMERS, and the broker attaches the original provider receipts to the acknowledgement receipts.
  3. EWT on payments to providers. The broker pays the provider net of EWT and issues BIR Form No. 2307 showing the provider as payee, the customer as real payor and the broker as the customer’s agent. The broker asks the customer for reimbursement only of the net amount actually paid, and the customer remits the EWT to the BIR.
  4. EWT on reimbursements to brokers. Reimbursements following the prescribed procedures are no longer subject to EWT because they are not part of the broker’s gross receipts. Reimbursements for expenses benefiting the broker, and others covered by the broker’s VAT official receipts, form part of gross receipts and are subject to EWT.

Who is affected

  • Brokers and similarly situated persons
  • Customers of brokers
  • Third-party service providers

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.

Related issuances

CitesRR No. 30-2003

Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.