RMC No. 22-2010: Publishes the full text of Republic Act No. 10001 entitled “An Act Reducing the Taxes on Life Insurance Policies, Amending for this Purpose Sections 123 and 183 of the National Internal Revenue Code of 1997, as Amended”

Key points

1. Tax on life insurance premiums. Section 123 now sets a tax of two percent (2%) of the total premium collected on persons or companies doing life insurance business in the Philippines. Purely cooperative companies or associations are excepted, and the section lists premiums that are not taxed, such as premiums refunded within six (6) months for rejected risk and reinsurance by a company that already paid the tax.
2. Which policies get the 2% rate. The 2% rate applies only to policies issued after the Act takes effect. For policies taken out earlier with premiums not yet fully paid, it applies to the remaining balance and remaining years.
3. Documentary Stamp Tax. Section 183 sets a one-time Documentary Stamp Tax on life insurance. It is exempt up to Php100,000.00, Php10.00 above Php100,000.00 up to Php300,000.00, Php25.00 above Php300,000.00 up to Php500,000.00, Php50.00 above Php500,000.00 up to Php750,000.00, Php75.00 above Php750,000.00 up to Php1,000,000.00, and Php100.00 above Php1,000,000.00.
4. Sunset of the tax. Five (5) years after the effectivity of the Code, no tax on life insurance premium is collected. On that date, life insurance policies are exempt from the Documentary Stamp Tax.

Who is affected

• Persons, companies and corporations doing life insurance business in the Philippines

Deadlines and effectivity

• 2% rate: policies issued after effectivity of RA No. 10001
• Premium tax stops five (5) years after effectivity of the Code