Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 739)
Presidential Decree No. 739 amends Sections 255 and 358 of the National Internal Revenue Code to harmonize the provisions regarding taxes on insurance premiums with the Insurance Code, specifically relating to the collection and disposition of premium taxes.
A tax of four percent (4%) is imposed on the total premiums collected by insurance companies conducting business in the Philippines.
No, purely cooperative companies or associations conducted by their members for their own protection and not for profit are exempt from this tax.
Premiums refunded within six months due to rejection of risk or returned for other reasons, reinsurance by a company that already paid the tax, premiums collected by branches of domestic corporations outside the Philippines on life insurance of non-residents if taxed by the foreign country, and premiums on reinsurance covering risks or insured persons outside the Philippines if taxed by the foreign country are excluded. Also, that portion of premiums collected on variable contracts in excess of amounts needed to insure lives of variable contract owners is excluded.
Variable contracts are as defined in Section 232(2) of Presidential Decree No. 612 (Insurance Code), referring to contracts where premiums include amounts in excess of those necessary to insure the lives of the owners of such contracts.
Twenty-five percent (25%) of the premium tax collected under Section 255 shall accrue to the Insurance Fund.
The Insurance Fund is used to defray the operating expenses of the Insurance Commission.
The Commissioner of Internal Revenue is responsible for turning over and delivering the Insurance Fund to the Insurance Commission as soon as the collection is made.
Yes, all laws, rules, and regulations inconsistent with this decree are repealed, modified, and/or amended accordingly.
The decree took effect upon its approval on July 1, 1975.