Exemption of Non-Life Insurance Policies and Bonds from Documentary Stamp Taxes

January 20, 1989 BIR RULING NO. 006-89 121, 184, 185 & 187 000-00 006-89 M a d a m : This refers to your letter dated December 6, 1988 requesting for a ruling as to whether or not non-life insurance policies and bonds issued in Hong Kong by the Hong Kong branch of a domestic non-life reinsurance company are subject to the documentary stamp and premium taxes. In reply, please be informed that since the non-life insurance policies and bonds are issued in Hong Kong, the same are not subject to the documentary stamp taxes respectively imposed under Sections 197, 198 and 200 (renumbered as Section 184, 185 and 187 by Executive Order No. 273) of the Tax Code, as amended. This is so because the documentary stamp tax, being an excise tax, is applicable only transactions effected and consummated within the Philippines. On the question of whether or not the premiums on said non-life insurance policies are subject to premium tax, it is noted that the tax on insurance premium is collected from any person, company or corporation "doing insurance business of any sort in the Philippines". (Sec. 121, Tax Code) Although the non-life reinsurance company adverted to in your query is a domestic corporation doing insurance business in the Philippines, its Hong Kong branch cannot be considered as doing business in this country. Such being the case, the non-life insurance policies and bonds which are issued abroad by the Hong Kong branch are likewise not subject to the 5% premium tax imposed under said Section 121 (formerly Section 223) of the Tax Code, as amended by P.D. No. 1994.) Very truly yours, (SGD.) JOSE U. ONG Commissioner