Exemptions and Special Provisions for Cooperatives and Certain Domestic Companies
- Purely cooperative companies or associations are exempt; defined as entities operated solely by members with funds collected among themselves for mutual protection and non-profit.
- Domestic insurance companies with capital impairment (owing 50% or more of indebtedness from the last war) are exempt from this tax for four years from the enactment of this amendment.
- Newly organized domestic insurance companies pay a reduced tax of 1% on total premiums for the first five years, then revert to 3% thereafter.
Taxation on Agents of Foreign Insurance Companies
- Agents authorized to procure policies for foreign companies not authorized to operate in the Philippines must file annual reports of total premiums received and pay a tax.
- The tax imposed on such agents is twice the 3% tax, equating to 6% of the premiums.
- This tax excludes reinsurance transactions.
- The section does not restrict property owners from directly obtaining insurance from foreign companies without agents in the Philippines.
- Property owners who directly obtain insurance must report to the Insurance Commissioner and the Collector of Internal Revenue and pay a 5% tax on premiums, subject to penalties for non-compliance.
Effectivity of the Act
- The provisions of this Act take effect immediately upon approval.