Lola and LoLeng Insurance Brokerage, Inc. (“L&L”) is an insurance broker which liaises between clients and insurance companies. For this service, it charges commissions and for which it is also charges output VAT. However, for 6 months in 2018, L&L had been issuing VAT official receipts not only for the commissions earned but also for the premiums it received from clients in behalf of the insurance companies. The BIR is now assessing L&L for alleged deficiency VAT arising from the premiums it collected from the clients. L&L is arguing that since it is just an insurance broker, it should be liable for VAT only on the commission, and not on the premiums it collected. Is L&L correct? a. No. L&L became liable for VAT on the gross amount of premiums when it issued VAT official receipts for the premiums it received. b. Yes. As a broker, it should be liable for VAT only for the commissions earned c. Who cares? d. None of the above
. Lola and LoLeng Insurance Brokerage, Inc. (“L&L”) is an insurance broker which liaises between clients
and insurance companies. For this service, it charges commissions and for which it is also charges output
VAT.
However, for 6 months in 2018, L&L had been issuing VAT official receipts not only for the commissions
earned but also for the premiums it received from clients in behalf of the insurance companies.
The BIR is now assessing L&L for alleged deficiency VAT arising from the premiums it collected from the
clients. L&L is arguing that since it is just an insurance broker, it should be liable for VAT only on the
commission, and not on the premiums it collected. Is L&L correct?
a. No. L&L became liable for VAT on the gross amount of premiums when it issued VAT official receipts
for the premiums it received.
b. Yes. As a broker, it should be liable for VAT only for the commissions earned
c. Who cares?
d. None of the above
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