Wednesday February 21 , 2018

Advisory for Insurance Companies: Amendments on Premium and DST

Revenue Memorandum Circular (RMC) No. 49-2010
dated June 3, 2010

The BIR has introduced, through RMC 49-2010, substantial amendments to RMC 30-2008 and 59-2008,  on the taxability of Insurance Companies to Premium Tax, GRT and documentary stamp tax on the other types of income they generate aside from the premiums from their main activity of underwriting life insurance policies.

Please be advised of the following amendments:

1. Re-issuance fees, reinstatement fees, renewal fees as well as penalties paid to the life insurance  company  incidental to  or  in  connection  with the insurance policy contracts issued - subject to the five percent  (5%) premium tax on the gross amount received on such fees and/or penalties (previously subjected to VAT under Section 108 or Percentage Tax under Section 116);

2. Investment Income Realized from the Investment of Funds Obtained from Others if the investments have been allowed and approved by the Insurance Commission - subject to five percent (5%) premium tax (previously subjected to gross receipts tax under Sec. 121  of the Tax Code)

3. On Premium Deposit Fund (PDF) -

a. on investment  income  earned  by  the  insurance company  from  the investment activities using the fund - five percent (5%) premium tax (previously subjected to GRT under Section 121 of the Tax Code)
b. on the instrument issued to policyholder - exempt from DST (previously subjected to DST under Section 179 at the rate of P1.00 on each P200)
c. on interest earned by the policyholder - not anymore subject to the twenty percent (20%) final withholding tax

To read the full text of RMC 49-2010, please click on the following link

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