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FINANCE
Secretary Margarito Teves has directed the Bureau of
Internal Revenue (BIR) on Friday to suspend a new
mandate that seeks to collect more taxes from the
country’s insurance companies.
The
suspension was originally sought by Jose Cuisia Jr.,
president and chief executive officer of the
Philippine-American Life and General Insurance Co.
A former
governor of the Central Bank of the Philippines, Cuisia
expressed fears of a general slowdown in the sale of new
insurance products that translates into less tax
revenues for the government.
According to the Department of Finance, Teves directed
BIR chief Lilian Hefti to defer the implementation of
BIR memorandum circular 30-2008 that imposed additional
taxes on insurance products.
The
government and industry plan to hold a dialogue on the
issue.
The
Philippine Life Insurance Association, the Philippine
Insurers and Reinsurers Association and other
organizations earlier protested the imposition of new
taxes on an industry they claim is one of the most
heavily taxed in the country.
An angry
Cuisia earlier said, “This new tax burden will result
[in] new prices for our products, and we will be forced
to pass on the burden to consumers.”
The
industry also raised fears that the volume of new
premium sales this year would drop significantly,
leaving the government with less revenue.
Under
the new circular, the gross premium receipts of nonlife
insurers are subject to the 12-percent value-added tax,
and the compulsory third-party liability insurance for
motor vehicles must pay P15 in documentary-stamp tax.
The provision would have also covered the
documentary-stamp tax for group personal-accident
insurance and marine-cargo insurance.
Traditional life-insurance policy holders that pay
premium for the protection they get would have also been
subjected to a 5-percent premium tax, plus 50 centavos
for every P200 worth of premium and the 35-percent
corporate income tax.
Cuisia
said it will take the industry at least three years to
recover revenue from lost opportunity should the
circular remain in place.
This,
from an industry that suffers much from lack of
penetration and “all because government refuses to find
progressive ways of taxing its people.”
Cuisia
also questioned the validity of prohibiting the
insurance industry from recognizing agents’ commissions
as allowable deductions from gross sales.
Secretaries Jose Isidro Camacho, Cesar Purisima and now
Teves all rooted for new taxes on the premise that “we
need the revenue.” Government needs to rethink its
revenue policy, Cuisia said. |
