Are you contemplating to purchase building, house and lot and other realties with the help of a real estate broker? You might consider checking the new tax rules on payments to real estate brokers. In order to comply, one may need to know not only the expertise and reliability of such person but also whether he passed the licensure exam as provided by the Professional Regulations Commission (PRC) for the purpose of withholding taxes.
Previously, real estate service practitioners, real estate consultant, appraiser and broker were all subjected to 10% creditable withholding taxes on the income payments as provided by the tax regulations without qualifications. However, with the recent amendments by the Bureau of Internal Revenue, payments of fees for services rendered by the real estate practitioner is subject to 15% if their gross income exceeds P720,000 for the current year, and 10% if otherwise. Hence, 15% tax should be deducted on income payments if you are dealing with a licensed broker and if he is earning more than P720,000 for a year.
If you need assistance preparing tax opinions or any tax matters, kindly contact Triple I Consulting.