BusinessWorld
Finance
Posted on June 12, 2011 09:54:47 PM
THE INSURANCE Commission (IC) has urged nonlife insurers to lobby for the removal of taxes on its policies to make these more affordable for consumers.
“We will support any move of the nonlife insurance industry to lower or eliminate the taxes on their policies,” Insurance Commissioner Emmanuel F. Dooc told BusinessWorld at the sidelines of a Commission on Appointments hearing at the Senate on Wednesday.
Nonlife policies are levied an array of taxes, including a 12% value-added tax (VAT), 12.5% documentary stamp tax, 2% fire service tax and between 0.15-0.75% local government tax.
Mr. Dooc compared this to the life insurance industry, which was able to successfully lobby for a reduction of the premium tax to 2% from 5%.
The amendment to the National Internal Revenue Code of 1997 was carried out through Republic Act No. 10001 enacted in Feb. 2010.
“[The life insurance industry] enjoyed a good 2010 and a good first quarter this year. This is the impact of the benefits of tax relief,” he said.
“Premiums have gone down, and there are more people who are interested because [policies] are more affordable. Almost all companies have restructured their premiums after the taxes were lowered,” Mr. Dooc added.
The IC chief rued that the nonlife industry, led by the Philippine Insurers and Reinsurers Association (PIRA), did not join the Philippine Life Insurance Association when it appealed for tax breaks in Congress in 2009.
“Nobody thought the bill could be passed so quickly,” he pointed out.
The law also provided that no tax on life insurance premiums would be collected by 2015, right in time for the lowering of trade barriers in the Association of Southeast Asian Nations (ASEAN), that will enable the free flow of goods and services, including insurance, among member nations.
“The nonlife industry could face a lot of competition in 2015, especially with other ASEAN countries enjoying better tax regimes,” Mr. Dooc pointed out.
PIRA general manager Mario C. Valdez earlier stated that Philippine nonlife insurers shoulder a 26.5% tax burden on premiums. In comparison, Singapore charges only a 7% VAT for every policy, while Thailand charges only 3.9% for personal accident policies and 7.4% for all other types. Indonesia charges 0.4%. -- Diane Claire J. Jiao
