Insurance Premium Payments Deductible as Business Expense

August 26, 1993 BIR RULING NO. 363-93 INSURANCE PREMIUM PAYMENTS DEDUCTIBLE AS BUSINESS EXPENSE 30 (a) (4) 081-83 363-93 The Insular Life Assurance Company, Ltd. Insular Life Bldg. 6781 Ayala Avenue Makati, Metro Manila Attention: Mr . Ramon B . Abinuman This refers to your letter dated March 25, 1993, in effect, requesting for a ruling whether or not insurance premiums paid entirely by the company for insurance policies taken by said company, where the proceeds are intended solely for the benefit of their insured-employee's family, shall be deductible from the company's gross income. In reply, please be informed that pursuant to Section 30(a) (4) of the Tax Code, as amended, where a corporation takes out insurance on the life of a key officer, designating as beneficiary thereby the family of the insured, the premiums paid can be claimed by the corporation as deductible business expense from its gross income as long as the members of the key officer's family are not so situated or so related with the corporation as would make it an indirect beneficiary of the proceeds of the insurance. Moreover, such premium payments made by the corporation shall constitute additional salary or compensation to the key officer and must therefore be declared by him as part of his taxable compensation income under Section 27 in relation to Section 21(a) both of the Tax Code, as amended. cdtech LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue