Pages

Sunday, April 7, 2013

Insurance Premiums Tax


You might find this interesting. RA 10001 has set a new rate on the tax on life insurance policies, including their documentary stamp taxes.

Life insurance premiums tax has been lowered from 5% to 2% on the total premiums collected from life insurance businesses. This 2% rate is not retroactive and will apply only to those insurance policies issued after RA 10001's date of effectivity (February 23, 2010.) In case a policy was taken before February 23, 2010, but the premiums weren't fully paid, the 2% rate will cover the remaining balance for the remaining years. Cooperatives are exempt from this tax.

The following transactions will not be included in the taxable receipts:

1.) Premiums refunded within 6 months from date of payment due to rejection of risk (or other reasons) to a person who is insured
2.) In a contract of reinsurance if the company has already paid the tax
3.) Premiums collected or received by any branch of a domestic corporation, association or firm doing business outside the Philippines on account of a nonresident insured if the foreign country where branch in question is located imposes taxes on the premiums
4.) On the portion of premiums collected or received by the insurance companies on variable contracts, in excess of the necessary amounts to insure the lives of variable contract owners

And it gets better! Under sec. 4 of this law, beginning 2015, no tax on life insurance premiums will be collected. Also,they will be exempt from documentary stamp tax! (Oh yeah!)

The rates of documentary stamp tax on insurance policies (which will thankfully be abolished on 2015) are as follows:

If the insurance amount is

Not more than Php100,000.00 = exempt
More than Php100,000.00 but less than Php300,000.00 = Php10.00
More than Php300,000.00 but less than Php500,000.00 = Php25.00
More than Php500,000.00 but less than Php750,000.00 = Php50.00
More than Php750,000.00 but less than Php1 Million = Php75.00
More than Php1 Million = Php100.00

So there you have it: on more reason to take on life insurance.

2 comments:

  1. By the way if you need insurance just contact me through my FB account. www.facebook.com/emmanlijesta

    ReplyDelete