BIR Ruling No. 007-63

February 27, 1963 BIR RULING NO. 007-63 Mr. Pedro F. Eleazar Vice-President Overseas Insurance Corporation Suite 509 Bank of P.I. Bldg. Plaza Cervantes, Manila S i r : Reference is made to your letter dated November 5, 1962, requesting information as to whether or not reinsurances transacted with foreign insurance companies under the so-called treaty agreement under which policies of reinsurance are not issued and reinsurance contracts with another company (covered by a reinsurance policy) are subject to the documentary stamp tax prescribed by Sections 221 and 222 of the Tax Code and liability for the payment of the tax in both cases. LibLex In reply, I have the honor to inform you as follows: Reinsurance contracts are covered by Section 221 of the Tax Code and, therefore, reinsurance policies are subject to the tax prescribed therein. (See 56, Documentary Stamp Tax Regulations) In accordance with Section 62 of the Documentary Stamp Tax Regulations, the insurer, agent or sub-agent, or broker; effecting, accepting, placing or soliciting the insurance and also the insured are liable for the payment of the tax. Section 52 of the same regulations provides that the term "other instruments" includes any instrument by whatever name the same is called whereby insurance is made or renewed, i.e. by which the relationship of insurer and insured is created or evidenced, whether it be a letter of acceptance, cablegrams, letters, binders, certificates, covering notes, or memoranda. LLphil In the light, therefore, of the regulations, the so-called "bordereaux or statements" mentioned in your letter or even the reinsurances treaty agreement itself, evidences the contract of reinsurance. Such being the case, your queries are answered in the affirmative, the tax to be paid by the original insurer or the reinsurer depending upon the arrangement of the parties. Very truly yours, (SGD.) JOSE B. LINGAD Acting Commissioner of Internal Revenue The above ruling was duly signed by the Acting Commissioner of Internal Revenue on February 27, 1963. LLjur (SGD.) P. F. LANDAS Revenue Operations Head (Legal)