Who Should Pay the Documentary Stamp Tax on Insurance Policies in a Group Life Insurance

January 24, 1992 BIR RULING NO. 036-92 173; 183 000-00 036-92 Amante, Tan & Associates Suite 608-610 Roman Santos Bldg. Plaza Lacson, Sta. Cruz Manila Attention: Atty . Elvin P . Grana Gentlemen : This refers to your letter dated October 28, 1991, requesting information which of the two should pay the documentary stamp tax on insurance policies in a group life insurance: the insurer (Insurance Company) or the insured? In reply, please be informed that under Section 173 of the Tax Code, as amended by P.D. No. 1994, documentary stamp tax is payable by the person making, signing, issuing, accepting or transferring the document, instrument or paper. This provision leaves the tax to be paid indifferently by either party. (Sta. Clara Lumber Company, Inc. vs. Jose Aranas, CTA Case No. 502, June 12, 1959) Accordingly, in a contract of insurance either the insurer or the insured is liable for the payment of the documentary stamp tax imposed by Section 183 of the Tax Code on the insurance policies issued. Of course when one party to the contract of insurance enjoys exemption from the payment of the documentary stamp tax, the other party who is not so exempt shall be the one directly liable for the payment of the documentary stamp tax on the insurance policies issued. (Section 173, Ibid.) Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue