Publishing Sections 263, 268 and 269 of the National Internal Revenue Code of 1977, as Amended by PD 1959, Increasing the Tax Rates on Insurance Premiums, Amusement Places and Winnings on Horse Races and Jai-alai

October 15, 1984 REVENUE MEMORANDUM CIRCULAR NO. 26-84 SUBJECT : Publishing Sections 263, 268 and 269 of the National Internal Revenue Code of 1977, as Amended by PD 1959, Increasing the Tax Rates on Insurance Premiums, Amusement Places and Winnings on Horse Races and Jai-alai TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, published hereunder are the amended provisions of Sections 263, 268, and 269 of the National Internal Revenue Code of 1977, as amended by PD 1959. SECTION 43 . Section 263 of this Code, as amended, is hereby further amended to read as follows: cd "Sec. 263. Tax on insurance premium. There shall be collected from every person, company, or corporation (except purely cooperative companies or associations) doing insurance business of any sort in the Philippines, a tax of six per centum of the total premium collected, whether such premiums are paid in money, notes, credits or any substitute for money; but premiums refunded within six months after payment on account of rejection or risk or returned for other reason to a person insured shall not be included in the taxable receipts; nor shall any tax be paid upon reinsurance by a company that has already paid the tax; nor upon premiums collected or received by any branch of a domestic corporation, firm or association doing business outside the Philippines on account of any life insurance of the insured who is a non-resident, if any percentage tax on such premium is imposed by the foreign country where the branch is established nor upon premiums collected or received on account of any reinsurance, if the risk insured against covers property located outside the Philippines, or the insured, in case of personal insurance, resides outside the Philippines, if any percentage tax on such premiums is imposed by the foreign country where the original insurance has been issued or perfected; nor upon that portion of the premiums collected or received by the insurance companies on variable contracts (as defined in Sec. 232 (2) of Presidential Decree No. 612), in excess of the amounts necessary to insure the lives of the variable contract workers. "Cooperative companies or associations are such as are conducted by the members thereof with the money collected from among themselves and solely for their own protection and not for profit." cd i SECTION 44 . Section 268 of this Code, as amended, is hereby further amended to read as follows: "Sec. 268. Amusement taxes . There shall be collected from the proprietor, lessee of operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball games, Jai-alai, race tracks and bowling alleys, a tax equivalent to: "1. Eighteen per centum in the case of cockpits; "2. Eighteen per centum in the case of cabarets, night or day clubs; "3. Fifteen per centum in the case of boxing exhibitions; "4. Fifteen per centum in the case of professional basketball games as envisioned in Presidential Decree No. 871. Provided, however , that the tax herein shall be in lieu of all other percentage taxes of whatever nature and description. "5. Thirty per centum in the case of Jai-alai and race tracks; and "6. Fifteen per centum in the case of bowling alleys of their gross receipts, irrespective of whether or not any amount is charged or paid for admission. For the purpose of the amusement tax, the term "gross receipts" embraces all the receipts of the proprietor, lessee or operator of the amusement place. Said gross receipts also include income from television, radio and motion picture rights, if any. (A person or entity or association conducting any activity subject to the tax herein imposed shall be similarly liable for said tax with respect to such portion of the receipts derived by him or it.) "The taxes imposed herein shall be payable at the end of each quarter and it shall be the duty of the proprietor, lessee, or operator concerned, as well as any party liable, within twenty days after the end of each quarter, to make a true and complete return of the amount of the gross receipts received during the preceding quarter and pay the tax due thereon. If the tax is not paid within the time prescribed above, the amount of the tax shall be increased by twenty-five per centum , the increment to be part of the tax. casia "In case of willful neglect to file the return within the period prescribed herein, or in case a false or fraudulent return is willfully made, there shall be added to the tax or to the deficiency tax, in case any payment has been made on the basis of the return before the discovery of the falsity or fraud, a surcharge of fifty per centum of its amount. The amount so added to any tax shall be collected at the same time and in the same manner and as part of the tax unless the tax has been paid before the discovery of the falsity or fraud, in which case, the amount so assessed shall be collected in same manner as the tax." SECTION 45 . Section 28 of this Code, as amended, is hereby further amended to read as follows: "Sec. 269. Tax on Winnings. Every person who wins in horse races or Jai-Alai shall pay a tax equivalent to fifteen per cent of his winnings or 'dividends', the tax to be based on the actual amount paid to him for every winning ticket after deducting the cost of the ticket. The tax herein prescribed shall be deducted from the 'dividends' corresponding to each winning ticket and withheld by the operator, manager, or person in charge of the horse-races or Jai-Alai before paying the 'dividends' to the person entitling thereto. The same tax shall be collected from owners of winning race horses at the same time and in the same manner above. "Operator, manager, or person in charge of horse races or Jai-Alai shall, within twenty days from the date the tax was deducted and withheld in accordance with the first paragraph hereof, file a true and correct return with the Commissioner in the manner and form to be prescribed by the Minister of Finance, and pay within the same period the total amount of tax so deducted and withheld. "If the tax herein provided is not paid within the time prescribed above, or in case of willful neglect to file the return within the period prescribed herein, or in case a false or fraudulent return is willfully made, there shall be added to the tax or to the deficiency tax, in case any payment has been made on the basis of the return before the discovery of the falsity or fraud, the corresponding surcharges provide in Section 268 of this Code." Salient features of the amendments The amendatory sections have increased the tax rates on certain miscellaneous taxes. Said increases are shown in the tabular presentation below: Sections Tax Base Charges in Tax Rate Sec. 263 Receipts of insurance companies From 4% to 6% Sec. 268 Gross receipts from the following amusement places a) Cockpits From 12% to 18% b) Cabarets, night or day clubs From 12% to 18% c) Boxing exhibition From 10% to 15% d) Professional basketball games From 10% to 15% e) Jai-Alai and race tracks From 20% to 30% f) Bowling alleys From 20% to 30% Sec. 269 Winnings on horse races and Jai-Alai From 10% to 15% The increases in tax rates take effect beginning October 15, 1984. All internal revenue officials, employees, and others concerned are hereby enjoined to give this Revenue Memorandum Circular the widest publicity possible. RUBEN ANCHETA Acting Commissioner