Life Insurance Tax Key Issue in The Sector.

Sun Life Financial Philippines President Esther Tan revive the issue of taxation for life insurers "to see the immediate resolution of tax issues that negatively affect the sector, now that the burden of the expansion of value added tax is within reach.
"Our industry is burdened by high taxes - one of the highest, if not the highest in the region," said Tan. The new law on VAT, which will increase to 12 percent next year, will add to insurance quotes in the end, she warned.

There are three major sources of taxation of insurance products against. These taxes are imposed once the premiums are paid when the investment income are made, and thirdly, where the business income is reported.

Currently the government levies a tax of five per cent bonus on all premium payments received by insurance companies. Documentary stamps or DST is levied on all policies issued at a rate of R0.50 per R200 value of the premium.

"There are differences between how the BIR (Bureau of Internal Revenue) interpreter of the law on summer time and that the same law, obviously important for us," said Tan. It refers the DST, which is the responsibility of insurance companies. "If we understand that the government must raise more money, the law is the law."

The development of the industry was "stifled" because of the excessive tax burden.

The current tax treatment is Philippine life insurance at the expense of their products become more expensive. For example, insurers complain that "moneyed Filipinos" buy dollars instead of their policies in other countries where the premium rates are much better.

"(If this continues), it will lead to capital outflows and the rejection of the government to attract long-term capital in the country, the Philippine Life Insurance Association, composed of 38 members, said earlier.

To help the industry expand its business and improve revenue, insurers insist that his proposal for tax relief will not affect the collection efforts of the government, but rather increase the tax on source.

However, the Ministry of Finance, which receives at least P5 billion in taxes from the industry, are not inclined to abandon it.