Every Branch Office of an Insurance Company is a Separate and distinct Establishment - Subject to Privilege Tax

June 20, 1977 BIR RULING NO. 004-77 Every branch office of an insurance company is a separate and distinct establishment subject to the privilege tax Returned to the Revenue Regional Director, Revenue Region No. 1, BIR, Baguio City the within papers bearing on the issue as to whether or not the branch office at Laoag City of the Great Pacific Life Assurance Corporation is subject to a fixed tax as a "separate or distinct business establishment," considering that said office performs the following: cdt "1. Receiving of insurance application submitted by the insurance agents for transmittal to the main office in Makati, Rizal for processing and approval; "2. Delivering policy contracts issued by the main office; "3. Receiving premium payments (on temporary receipts of the corporation) and remitting them to the main office who will in turn issue the official receipts; "4. Receiving claims for insurance to be filed with the main office and delivering payments thereof to the claimants; "5. Sales of insurance is conducted by the unit manager himself and by the agents under him in representation of the corporation and thru the facilities of their Laoag office, although the policy contracts are perfected and issued by the main office." It has been repeatedly held by this Office that every separate or distinct establishment or place where business subject to tax is conducted must pay the required privilege tax due if sales are made thereon, pursuant to Section 178 of the Tax Code. In the case of insurance, it cannot be gainsaid that the main office alone performs the job of selling insurance policies. For it is peculiar in this kind of business that certain aspects of the sale of insurance policies like the offer of insurance to the public, the receipt of applications for insurance and their subsequent delivery to policy holders once approved, the receipts of claim and premiums for insurance all undertaken by the branch offices; while the main office solely processes and approves the application and claims for insurance and then issues the same to branch offices for delivery to policy holders. As the branch office coordinates with the main office in the sale of insurance policy, this Office believes that the branch office of the Great Pacific Life Assurance Corporation in Laoag City is liable to the annual fixed tax of P500.00 imposed by Section 182(A)(3)(gg) of the Tax Code. aisa dc