Withholding Tax on Philippine Real Estate Service Practitioners

By: Tax and Accounting Center Philippines

In the past, real estate brokerage has been to have a notable contribution to the boom of real estate industry from the buying and selling of residential and commercial lots, residential subdivisions, and condominium units. Real estate brokers earned through commissions and the same was subject to 10% creditable withholding tax by the income payor – the real estate sellers.

Recognizing the contribution of the real estate brokers in the social political, economic development and progress of the country, Republic Act No. 9646 dated June 29, 2009 (RA No. 9646) has been enacted to law. Under RA No. 9646, real estate service practitioners had been institutionalized by creating a Professional Regulatory Board of Real Estate Service under the supervision and administration control of Professional Regulation Commission (PRC) who would administer the professional examination and licensing of real estate service practitioners. Real estate service practitioners are specified to refer to the following:

• Real estate consultant – a duly registered and licensed natural person, who offers or renders professional advice and judgement on: (i) the acquisition, enhancement, preservation, utilization or disposition of lands or improvements thereon, (ii) the conception, planning, management and development of real projects.

• Real estate appraiser – a duly registered and licensed natural person who renders services in estimating and arriving at an opinion of or acts as an expert on real estate values, such services of which shall be finally rendered by the preparation of the report in acceptable form

• Real estate assessor – a duly registered and licensed natural person who works in the local government unit and performs appraisal and assessment of real properties, including plats, equipment, and machineries, essentially for taxation.

• Real estate broker – a duly registered and licensed natural person who acts as an agent of a party in a real estate transaction or any interest therein.

• Real estate salesperson – a duly accredited natural person who performs a service for and in behalf of a registered and licensed real estate broker for and in expectation of a share in the commission, professional fee, compensation or other valuable consideration.

With the above conversion of real estate service practitioners to a higher professional status, Revenue Regulations No. 10-2013 dated May 2, 2013 has been issued to govern the applicable withholding tax on income payments to real estate service practitioners as follows:

A. Revenue Regulation No. 2-98, Section 2.57.2. Income payments subject to creditable withholding tax and rates prescribed thereon. – xxx xxx

(A) Professional fees, talent fees, etc., for services rendered by individuals. – On the gross professional, promotional and talent fees or any other form of remuneration for the services of the following individuals – Fifteen percent (15%), if the gross income for the current year exceeds P720,000; and Ten percent (10%), if otherwise:

(1) Those individually engaged in the practice of profession or callings: xxx designers, real estate service practitioners (RESPs), (i. e. real estate consultants, real estate appraisers and real estate brokers) requiring government licensure examination given by the Real Estate Service pursuant to Republic Act No. 9646 and all other profession requiring government licensure examination regulation by Professional Regulation Commission.

B.  Revenue Regulations No. 2-98, Section 2.57.2. – Income payments subject to creditable withholding tax and rates prescribed thereon.

(G) Income payments to certain brokers and agents. – On gross commissions of customs, insurance, stock, immigration and commercial brokers, fees of agents of professional entertainers and real estate service practitioners (RESPs), (i. e. real estate consultants, real estate appraisers and real estate brokers) who failed or did not take up the licensure examination given by and not registered with the Real Estate Service under the Professional Regulations Commission. – Ten percent (10%).

In short, the real estate service professionals under Professional Regulation Commission are considered professionals whose income payments to them are considered as professional fees subject to 15% if the gross income for the current year exceeds P720,000, or 10% if otherwise. In using the 10% withholding tax rate, Revenue Regulations No. 30-2003 requires that the recipient provides the income payor an Affidavit – Declaration of Current Year’s Gross Income, otherwise, 15% applies.

For real estate service practitioners who do not have yet a license issued by the Professional Regulations Commission, the withholding tax rate is 10%, regardless of their gross income in the current year.

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may please send mail at 

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