Insurance Commission

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Percentage Taxes on Insurance Companies

Requested from IC by Fernando Martin Aguila at 03:44 PM on Jul 02, 2019.
Purpose: Government Research
Date of Coverage: 07/01/2019 - 07/02/2019
Tracking no: #IC-787455582030

Fernando Martin 03:44 PM, Jul 02, 2019

Non-life insurance companies have premiums subject to the 12% VAT. Additionally, both non-life and life insurance activities independent from the business of insurance, e.g. rent income, are subject to the 12% VAT. RMC 59-2008

However, according to Section 109 (BB) of the NIRC, the sale of goods or the performance of services of companies with gross annual sales not exceeding PHP 3 Million are exempt from VAT, which Section 116 subjects to a 3% Percentage tax. Is it possible for non-ancillary insurance activities and non-life premiums to be taxed at a 3% percentage tax instead of the 12% VAT?

Edmar 05:43 PM, Jul 02, 2019

July 2, 2019

Dear Fernando Martin,

Thank you for your request dated Jul 02, 2019 under Executive Order No. 2 (s. 2016) on Freedom of Information in the Executive Branch, for Percentage Taxes on Insurance Companies.

We received your request on Jul 02, 2019 and will respond on or before Jul 23, 2019 03:44:33 PM, in accordance with the Executive Order's implementing rules and regulations.

Should you have any questions regarding your request, kindly contact me using the reply function on the eFOI portal at https://pcoomaster07052018110000-dot-efoi-ph.appspot.com/requests/aglzfmVmb2ktcGhyHAsSB0NvbnRlbnQiD0lDLTc4NzQ1NTU4MjAzMAw, for request with ticket number #IC-787455582030.

Thank you.

Respectfully,

Edmar Ignacio
FOI Officer

Fernando Martin 05:07 PM, Jul 09, 2019

Just for clarification, my main concern is knowing whether  non-life premiums can be subject to the 3% percentage tax instead of VAT. Also, I would like to ask if HMO membership fees (as they are called in RMC 4-2003) can also be liable to the 3% percentage tax instead of VAT, per Section 109 (1)(BB) of the tax code?

I just feel both businesses, with their required paid-up capital, net worth, and reserve requirements (if applicable), would naturally have their gross receipts exceed PHP 3,000,000.00. However, I don't feel qualified enough to make such an assumption.

Thank you.

Cresencia 10:09 AM, Jul 15, 2019

July 15, 2019

Dear Fernando Martin Aguila,

Greetings!

Thank you for your request dated Jul 02, 2019 03:44:33 PM under Executive Order No. 2 (s. 2016) on Freedom of Information in the Executive Branch.

Your Request

You asked for Percentage Taxes on Insurance Companies.

Response to Request

Your FOI request is approved. I enclose a copy of the information you requested.

Your right to request a review

If you are unhappy with this response to your FOI request, you may ask us to carry out an internal review of the response by email at cr.gatchalian@insurance.gov.ph. Your review request should explain why you are dissatisfied with this response, and should be made within 15 calendar days from the date when you received this letter. We will complete the review and tell you the result within 30 calendar days from the date when we receive your review request.

If you are not satisfied with the result of the review, you then have the right to appeal to the Office of the President under Administrative Order No. 22 (s. 2011).

Thank you.

Respectfully,

Cresencia Gatchalian
FOI Receiving Officer

Attachments:
 Percentage Tax on Insurance Companies_reply.pdf

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