Withholding Tax on the Reinsurance Premiums Ceded to Non-Resident Foreign Companies

August 24, 1960 BIR RULING NO. 375-60 Guzman Bocaling & Co. Certified Public Accountants 316 Regina Bldg. M a n i l a Gentlemen : In reply to your letter dated July 28, 1960, I have the honor to inform you that reinsurance premiums ceded to non-resident foreign companies are subject to the withholding tax on the total amount without deductions. Accordingly, premiums on reinsurance ceded by non-resident foreign insurance companies to Philippine insurance companies as well as retrocession premiums on the reinsurance from Philippine reinsurers are not deductible from the total ceded reinsurance premiums. However, this Office has allowed the withholding agents, as a temporary arrangement during the pendency of the court cases involving this question, to withhold the tax on the remittable premiums only, but they shall remain liable for any deficiency withholding tax that may be assessed according to the decision in said cases. It is understood that the abovementioned premiums on reinsurance and retrocession premiums shall not be deducted in determining the remittable premiums and that premiums not remitted because of Central Bank restrictions shall likewise be subject to tax. Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue