Taxes on Life Insurance Companies on Two Distinct and Separate Bases

February 3, 1958 BIR RULING NO. 065-58 The Life Insurance Executives Association of the Philippines c/o Sycip, Gorres, Velayo & Co. 490 San Luis, Manila Gentlemen : I have the honor to acknowledge the receipt of your letter of November 26, 1957 and to confirm your observation therein that, under our General Circular No. V-251, implementing Republic Act No. 1855 which took effect on June 22, 1957, life insurance companies are taxed for the year 1957 on two distinct and separate bases, i.e., on the old basis from January 1 to June 21, 1957, and on the new basis from June 22 to December 31, 1957. prcd With respect to your suggestion of pro-rating the income and expenses of the life insurance companies to determine the tax liability for the period from January 1 to June 21, 1957 on the basis of statements of accounts for the full year , please be informed that this Office is agreeable thereto. However, considering the fact that Republic Act No. 1855 placed life insurance companies on an income tax basis that is entirely new and different from the tax basis under the old law, whether as to items of taxable income, deductions and rates of the tax, it is believed that separate financial statements for the period from June 22 to December 31, 1957 should be filed to determine the tax liability for the said period. In view thereof, you are requested to urge every life insurance company to file two separate returns, one for January 1 to June 21, 1957 under pro-rata basis, and another for June 22 to December 31, 1957 under the new income tax law on life insurance. cdll Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue