Tax Rules Respecting Reinsurance Premiums Ceded to Mexican Reinsurers

February 21, 1985 BIR RULING NO. 022-85 24 (b) 000-00 022-85 Gentlemen : This refers to your letter dated June 20, 1984 in behalf of your client, Mancera Hermanos y Cia, a foreign corporation, requesting confirmation of the tax rules with respect to reinsurance premiums ceded to Mexican reinsurers during the year 1977 and up to the present. In reply, please be informed as follows: 1. Reinsurance premiums ceded to Mexican reinsurance corporations not engaged in trade or business in the Philippines are not subject to income tax pursuant to Section 24(b)(1)(i) of the Tax Code, as amended. 2. Mexican reinsurance corporations that qualify as resident foreign corporations are subject to the regular corporate income tax rates of 25% on the first P100,000 and 35% on the excess thereof on their net taxable income from Philippine sources pursuant to Section 24(b)(2)(i) in relation to Section 24(a) of the Tax Code, as amended. 3. Reinsurance premiums ceded to reinsurance corporations are not subject to the 4% (now 6%) premium tax provided that the ceding corporation has already paid said tax pursuant to Section 263 of the Tax Code, as amended. cdt Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner