Amending Paragraph III (C)(5)(B)(iii)(a) of RMO No. 66-98 Entitled "Prescribing the Policies and Procedures for Processing and Monitoring of Tax Payments from Insurance Companies"

June 15, 1999 REVENUE MEMORANDUM ORDER NO. 48-99 SUBJECT : Amending Paragraph III (C)(5)(B)(iii)(a) of RMO No. 66-98 Entitled "Prescribing the Policies and Procedures for Processing and Monitoring of Tax Payments from Insurance Companies" TO : All Revenue Officers and Others Concerned Scope : Revenue Memorandum Order No. 66-98 was promulgated to simplify and strengthen the monitoring of tax payments due from insurance companies in coordination with the Insurance Commission. For purpose of monitoring the documentary stamp tax payments by insurance companies on non-life insurance policies, paragraph III (C)(5)(B)(iii)(a) of RMO 66-98 provides as follows: "iii. Documentary stamp tax monthly a) Gross premiums (net of returns and cancellations) received for the month by non-life insurance companies in all line of business" The documentary stamp tax on non-life insurance policies is governed by Section 184 of the National Internal Revenue Code of 1997 which provides that the documentary stamp tax on non-life insurance policies shall be computed based on the amount of premium charged (i.e., without any deduction), as follows: Cdphil "SECTION 184. Stamp Tax on Policies of Insurance Upon Property . On all policies of insurance or other instruments by whatever name the same may be called, by which insurance shall be made or renewed upon property of any description, including rents or profits, against peril by sea or on inland waters, or by fire or lightning, there shall be collected a documentary stamp tax of Fifty centavos (P0.50) on each Four pesos (P4.00), or fractional par thereof, of the amount of premium charged: Provided, however, That no documentary stamp tax shall be collected on reinsurance contracts or on any instruments by which cession or acceptance of insurance risks under any reinsurance agreement is effected or recorded. The above proviso of RMO 66-98 can possibly result to erroneous monitoring of DST payments by insurance companies on non-life insurance contracts considering that, while under Section 184 of the Code, the DST is computed based on the total amount of premium charged, hence, without any deduction for returns and cancellation, the above proviso of the RMO, however, may possibly be interpreted as allowing deduction of such returns and cancellation for purposes of computing the DST on non-life insurance contracts. Amendments : In view of the foregoing, paragraph III (C)(5)(B)(iii)(a) of RMO No. 66-98 is hereby amended to read as follows: "iii. Documentary stamp tax monthly: a) Gross premiums charged for the monthly by non-life insurance companies in all line of business" (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue