BIR Ruling No. 208-61

May 26, 1961 BIR RULING NO. 208-61 Messrs. Poblador, Cruz & Nazareno Roman Santos Bldg., Plaza Goiti Manila Gentlemen : This is in connection with your request for a ruling on the question of whether or not a premium tax should be imposed on the following transaction. In the affirmative, who should be liable to pay it? prcd "A foreign corporation registered and licensed to do business in the Philippines proposes to hire an employee who because of the nature of the position would be required to file a fidelity bond. Being a foreign company the employer would prefer to have the bond issued by a foreign bonding company domiciled in the same state. The employee would be asked to file an application for the bond thru the employer who would be authorized to select the bonding company issue the bond. The employee would pay the premium on the bond." The premium tax prescribed in Section 255 of the National Internal Revenue Code is due from every person, company or corporation doing insurance business of any sort in the Philippines. "Bonds guaranteeing fidelity of employee, written as a business and for profit, are essentially 'insurance' contracts"(Members of Lloyds in Lloyds Policy No. 52362 vs. California Fruit Growers Exchange, CCA, Cal. 126 Fed 56 , 561). Pursuant to the provisions of Section 258 of the Tax Code the employee who applies for fidelity bond directly with a foreign bonding company is liable for the payment of the premium tax thereon. LLpr Very truly yours, (SGD.) MISAEL P. VERA Deputy Commissioner of Internal Revenue