This Philippine tax guide discusses everything taxpayers need to know about taxes– from the TIN and its role in taxation to different tax ... (except reinsurance premium): 1. We understand that the BIR is revisiting its position on this matter and may possibly issue a reversal. Corporate - Tax credits and incentives; Corporate - Tax administration; Withholding Tax Rates Applicable Withholding Tax Rates. When I think of Filipino small and medium enterprises entrepreneurs, my father is the first person that comes to mind. She is the newly-elected President of the Asia-Oceana Tax Consultants’ Association. This coronavirus disease... First of two parts South Korea confirms first Covid-19 variant cases, Trump signs massive measure funding government, Covid relief, Dennis Anthony H. Uy of CNVRG is not Dennis A. Uy of unlisted Udenna group. Case digest 6 comments ... Just want to ask the withholding Tax rate on Security/messengerial and Security Expense? 002-99 (dated January 12, 1999), DA-184-04 (dated April 6, 2004), DA-569-04 (dated November 10, 2004), and DA-087-06 (dated March 6, 2006) which excludes from the gross income of the taxpayer and hence, exempt from Income Tax, contributions to Pag-Ibig 2, GSIS, SSS, Life Insurance, Pre-Need Plan in excess of the mandatory … In BIR Ruling DA-081-03, the BIR held that “where the employer decides to buy medical insurance for its employees, whether rank and file or supervisory, and their dependents, the insurance premiums paid by the employer shall be excluded from gross income and therefore not subject to withholding tax.” This reversal is controversial and has caused problems to employers for several reasons: As mentioned, TRAIN 1 did not amend the scope or coverage of income or benefits subject to FBT under Section 33 of the Tax Code. The BIR then held that such premiums are exempt from both FBT and income tax. 8-2018 and 11-2018) implementing TRAIN 1 (Republic Act No. – Insurance agents and insurance adjusters ... Tax Treatment of Fringe Benefits in the Philippines. Income Tax in the Philippines. RMC 50-2018 was issued last May 11 to answer inquiries about Revenue Regulations 8-2018 and 11-2018, which were released to implement the TRAIN law’s income tax provisions including withholding tax. A “fringe benefit” may still form part of the employee’s gross compensation income which is subject to income or withholding tax, as clarified by RR 3-98. The implementation of this issuance shall take effect immediately. Insurance health premiums are paid to health card or health insurance companies, not to the employees, and are at amounts agreed between the employers and such companies. Next Post: Non Taxable Employee Benefits – “DE MINIMIS” Benefits. Philippines Philippines: General insurance Commercial accounts/ tax and regulatory returns Accounting Tax return Not applicable. Thus, enrolling employees in group health insurance plans and providing them with health cards certainly benefit the employer’s business. insurance in the Philippines is subject to a 2% tax on gross premiums, which is collected from every person, company or corporation doing life insurance business of any sort in the country. 8424, “An Act Amending The National Internal Revenue Code, as Amended” Relative to the Withholding on Income Subject to the Expanded Withholding Tax and Final Withholding Tax, Withholding of Income Tax on Compensation, Withholding of Creditable Value-Added Tax and … Withholding tax 3. within the Philippines - Thirty-five percent (35%) ... (10) Life or health insurance and other non-life insurance premiums or similar amounts in excess of what the law allows. According to consultancy firm PricewaterhouseCoopers (PwC), this measure is designed to increase insurance rates. - P26,000.00 VAT - 2,600.00 Doc. Federal Board of Revenue (FBR) issued withholding tax card for tax year 2019/2020 and updated tax on insurance premium under Section 236U of Income Tax Ordinance, 2001. - P26,000.00 VAT - 2,600.00 Doc. Life insurance premiums are not tax deductible. Global Insurance Regulatory and Premium Tax Update – August 2018 RESEARCH AND BRIEFINGS This adviser provides a summary of the latest insurance regulation and premium-related developments affecting insurance contracts procured by a multinational group. Premiums collected by non-life insurance companies are subject to 12% VAT. The legislative changes for withholding tax are diverse. If the gross income for the year does not exceed P720,000, then a 10% withholding is required. Section 33(B)(10) of the Tax Code expressly provides that life or health insurance premiums and other non-life insurance premiums or similar amounts in excess of what the laws allow are subject to FBT. withholding agents not later than January 15 of each year, or at least prior to the initial payment of the professional fees/commissions/talent fees, etc., in order for them to be subject to 5% withholding tax. In other cases there will be not tax collection. Recipients can elect for the rate of RWT on interest to be 28% or 33%. Capital taxes and taxes on securities Capital gains realised from the sale, exchange or disposition of lands and/or buildings shall be subject to 6% final tax. Rates are different for transactions involving shares of stocks. General Insurance Premium at four percent, Life Insurance Premium if exceeding Rs0.3 million in aggregate per annum at one percent. Thus, there may difficulty in allocating the amount of premiums to employees concerned. at the rates that have been specified in the current tax regime. This Circular is being issued to revoke BIR Ruling Nos. This is why you have the “withholding tax” on your monthly payslip. Withholding tax is the most basic tax type that each and every taxpayer engaged in trade or business or in the practice of profession must learn. 2019/2020: Withholding tax rates issued on payment for goods and services, FBR issues withholding tax rates on cash, online banking transactions, FBR issues tax rates for income from immovable properties, FBR issues withholding tax rates on commercial, industrial electricity consumers, FBR issues withholding tax rates on registration of motor vehicles, FBR issues withholding tax rates for winning prize bonds, FBR issues withholding tax rates for sale, purchase of immovable properties, Withholding Tax Card: Non-ATL to pay up to 30pc tax on profit from bank deposits, saving schemes, Withholding Tax Card: Tax rates on salary income, Withholding Tax Card: non-ATL persons to pay 30pc tax on dividend income, Withholding Tax Card: Tax rates on imports of goods for ATL, non-ATL persons. Reply. Many jurisdictions also require withholding tax on payments of interest or dividends. Expanded Withholding Tax – Philippines Expanded Withholding Tax is a creditable tax prescribed for certain domestic (Philippine) payors and is creditable against the income tax due of the payee for the taxable quarter year. Withholding of a 5% tax on insurance premiums in Kenya The Kenyan government is intent on applying a 5% withholding tax on insurance premiums. I. Loan payments 4. A withholding tax, or a retention tax, is an income tax to be paid to the government by the payer of the income rather than by the recipient of the income. Withholding Tax also called as Retention Tax is the obligation of the taxpayer to withhold tax when making payments under specific heads (such as rent, commission, payment for professional services, salaries, contracts, etc.) Standard Insurance asked the Makati court to stop the implementation of Sections 108 and 184 of the tax code. 8-98 and 13-99, as Amended by Revenue Regulations No. The Withholding of Creditable Tax at Source or simply called Expanded Withholding Tax is a tax imposed and prescribed on the items of income payable to natural or juridical persons, residing in the Philippines, by a payor-corporation/person which shall be credited against the income tax liability of the taxpayer for the taxable year. Insurance premiums on group health insurance are not akin to bonuses or incentive pays. Thus, the exemption from FBT of group insurance premiums does not necessarily mean they are exempt from income tax on compensation income. The P90,000 exemption seeks to cover “other benefits” which generally include the 13th month pay, Christmas bonuses and productivity incentives, as provided under Section 32(B)(7)(e) of the Tax Code, as amended. 14-2000; and for Other Purposes. For example, life insurance agents pay a 2% percentage tax on the total premiums collected. Employee’s share of SSS, PhilHealth, and Home Development Fund (HDMF)/Pag-IBIG contributions 2. If you have any question or comment regarding this article, you may email the author at info@mtfcounsel.com or visit MTF Counsel’s website at www.mtfcounsel.com, Get the latest news from your inbox for free. Facebook ; Twitter In BIR Ruling DA-081-03, the BIR held that “where the employer decides to buy medical insurance for its employees, whether rank and file or supervisory, and their dependents, the insurance premiums paid by the employer shall be excluded from gross income and therefore not subject to withholding tax.” Aziza Hannah A. Bacay to this article. – Insurance agents and insurance adjusters ... Tax Treatment of Fringe Benefits in the Philippines. 10963). Stay Connected . Federal Board of Revenue (FBR) issued withholding tax card for tax year 2019/2020 and updated tax on insurance premium under Section 236U of Income Tax Ordinance, 2001. Thank you. If the gross income is higher than P720,000, a 15% withholding tax based on the gross income should be applied. Those changes also affect the reimbursement of Old Age and Survivors Insurance (‘OASI’) contributions. Federal Board of Revenue (FBR) issued withholding tax card for tax year 2019/2020 and updated tax on insurance premium under Section 236U of Income Tax Ordinance, 2001. - There shall be collected from every person, company or corporation (except purely cooperative companies or associations) doing life insurance business of any sort in the Philippines a tax of two percent (2%) of the total premium collected, whether such premiums … Premiums Written on direct business plus assumed premiums less cessions and retrocessions. Consequently, the CIR assessed against PETITIONER .withholding tax on FACTS: The petitioner Philippine Guaranty Co., Inc., a domestic insurance the ceded reinsurance premiums. Euney Marie J. Mata-Perez is a CPA-Lawyer and the Managing Partner of Mata-Perez, Tamayo & Francisco (MTF Counsel). WITHHOLDING TAX RATES ON CREDITABLE INCOME TAXES (EXPANDED) ... EWT – Insurance Agents and Insurance Adjusters RATE If the current year’s gross income is P720,000 and below 10% If the current year’s gross income exceeds P720,000 Brunei Darussalam imposes $0.074 (BRD 0.10) for every $741.52 (BRD 1,000) of … Final withholding tax. It merely increased the FBT rates from 32 percent to 35 percent and amended the personal income tax PIT rates, among others. Philippines Corporate - Withholding taxes ... limiting the Philippine tax on royalties to the lowest rate of Philippine tax that may be imposed on royalties of the same kind paid in similar circumstances to a resident of a third state. Withholding Tax; Re-Establishing the Policy that the Capital Gains Tax on the Sale, Exchange or Other Disposition of Real Property Classified as Capital Assets Shall be Collected as a Final Withholding Tax, Thereby Further Amending Revenue Regulations Nos. Updated up to June 30, 2020 . Employers and the employees would most welcome such a reversal. The BIR now effectively considers such premiums as compensation income that are exempt from income tax (and, consequently, from withholding tax requirements) only if they fall within the P90,000 exemption threshold. Copyright © The Manila Times – All Rights Reserved. Q16. Health premium payments are allowed as deductible expenses even if not subjected to withholding tax on compensation. Updated up to June 30, 2020 . As a withholding agent, if you do not comply with the withholding tax requirements, those expenses would be treated as non-deductible for the computation of your taxable income. In effect, employers who look out for the health concerns of their employees, as well as their employees, are being penalized. Withholding tax is the most basic tax type that each and every taxpayer engaged in trade or business or in the practice of profession must learn. 002-99 (dated January 12, 1999), DA-184-04 (dated April 6, 2004), DA-569-04 (dated November 10, 2004), and DA-087-06 (dated March 6, 2006) which excludes from the gross income of the taxpayer and hence, exempt from Income Tax, contributions to Pag-Ibig 2, GSIS, SSS, Life Insurance, Pre-Need Plan in excess of the mandatory … Those changes also affect the reimbursement of Old Age and Survivors Insurance (‘OASI’) contributions. The implementation of this issuance shall take effect immediately. The rate of RWT on interest is 33% where the recipient does not provide a tax file number. ... including an insurance company. How to Compute Withholding Tax Using an Online Calculator Information about Withholding Tax; Withholding Tax Guide 2021(PDF/1,337KB) Withholding Tax Guide 2020(PDF/1,187KB) Types, etc. The issue arises on whether premium costs paid for such group health insurance would be subject to the fringe benefits tax (FBT) or withholding/income tax on compensation income. When you sell shares of stocks listed and traded through the Philippine Stock Exchange, you have to pay 6/10 of 1% based on the gross selling price of the shares you sold. Otherwise, a 10% withholding tax must be applied. National Insurance premiums and education and development fund premiums Portacabin rent Withholding tax How to state obligation to deduct withholding tax, calculate and pay advance tax deduction Employer’s national insurance contributions and financial activity tax How to calculate, what you have to specify and pay The tax rate on total premiums collected by the insurance agent in any foreign insurance company is subject from 10% to 4% as the new tax rate. National Insurance premiums and education and development fund premiums Portacabin rent Withholding tax How to state obligation to deduct withholding tax, calculate and pay advance tax deduction Employer’s national insurance contributions and financial activity tax How to calculate, what you have to specify and pay Philippines Corporate - Withholding taxes ... limiting the Philippine tax on royalties to the lowest rate of Philippine tax that may be imposed on royalties of the same kind paid in similar circumstances to a resident of a third state. 4 / 47 (H) ... Creditable Withholding Tax Withheld at Source (BIR Form No. In May this year, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular No. within the Philippines - Thirty-five percent (35%) ... (10) Life or health insurance and other non-life insurance premiums or similar amounts in excess of what the law allows. (Read more article: 13 Approved Train Law Philippines 2019) 2. RMC 50-2018 was supposed to further clarify the withholding tax provisions under previous revenue regulations (Revenue Regulations Nos. Property losses sustained in relation to the business and not indemnified by insurance or other means are deductible from gross income. WITHHOLDING TAX RATES ON CREDITABLE INCOME TAXES (EXPANDED) BIR Form 1601 - E . The Philippines imposes a DST dependent on the value of the insurance that ranges from $0.213 to $2.13 (P10 to P100). Health insurance coverage may help ensure employees’ good health, a major factor for productivity, and would insulate employers from the financial burden of providing financial aid to employees for their medical and hospital bills. Since the Philippine government somewhat favor the poor, income taxes uses the graduated income tax rate meaning the higher your income, the higher the tax. She is a corporate, M&A and tax lawyer. Creditable Withholding Tax on Top Withholding Agents. The 10% withholding tax rate shall be applied in the following cases: (1) the payee failed to … company, entered into reinsurance contracts with foreign insurance companies Petitioner protested the assessment on the ground that reinsurance not doing business in the country, thereby ceding to … 14-2000; and for Other Purposes. Withholding Tax on Government Money Payments – Philippines Withholding Tax on Government Money Payments is the withholding tax withheld by government offices and instrumentalities, including government-owned or controlled corporations and local government units, before making any payments to resident suppliers of goods and services. April 17, 1998 REVENUE REGULATIONS NO. However, in several BIR rulings, the earliest of which was issued in 2003, the BIR affirmed that group insurance premiums costs are not also subject to income tax/withholding tax on compensation (BIR Ruling DA-081-03; BIR Ruling DA-374-08). Corporate - Tax credits and incentives; Corporate - Tax administration; Non-individuals have a lower income bracket but have higher withholding rates. at the rates that have been specified in the current tax regime. Withholding Tax; Re-Establishing the Policy that the Capital Gains Tax on the Sale, Exchange or Other Disposition of Real Property Classified as Capital Assets Shall be Collected as a Final Withholding Tax, Thereby Further Amending Revenue Regulations Nos. On sources from within the Philippines, certain passive income like interest from any Philippine currency bank deposit and yield or any other monetary benefit from deposit substitutes, trust funds and similar arrangements, royalties, prizes exceeding PHP10,000, and other winnings are subject to a final withholding tax of 20 percent. This means that any payment made to an insurance company should not be considered as an expense. RMC 50-2018 was issued last May 11 to answer inquiries about Revenue Regulations 8-2018 and 11-2018, which were released to implement the TRAIN law’s income tax provisions including withholding tax. Creditable Withholding Tax on Top Withholding Agents. By continuing to use this website without disabling cookies in your web browser, you are agreeing to our use of cookies. You have successfully joined our subscriber list. However, TRAIN 1 did not amend the coverage of FBT or the income tax provisions of the Tax Code on health insurance premiums. There is also no doubt the premiums for group insurance are paid for the convenience of the employer. Phil Guaranty v CIR - Free download as Word Doc (.doc / .docx), PDF File (.pdf), Text File (.txt) or read online for free. However, by way of exception, the court ruled that medical insurance premium expenses may be deemed a de minimis benefit exempt from FBT, income tax, and withholding tax on compensation, provided that the following conditions are … Every employer is required to deduct and withhold taxes on employees’ compensation in accordance to the Philippine Law. The rate of RWT on dividends paid is 33%, but the tax is reduced by the aggregate imputation and withholding payment credits attached to the dividend or taxable bonus share. Medical and hospitalization costs in the Philippines are not cheap and could be daunting for ordinary employees. By implications of the tax reforms under TRAIN RA 10963 in Philippines, withholding tax on professional fees is now 5% of gross income if annual income not exceeding PhP3M, otherwise, 10% of gross income for individuals, while professional fees to juridical entities is 10% of gross income if annual gross income or receipts does not exceed P720K, otherwise, 15%. In Thailand, a specific business tax (SBT) is imposed on life insurance at 2.5% of the gross receipts from the operation of the business while in Life-insurance policies not exceeding $2,127.67 (P100,000) are exempt from DST. Withholding Tax also called as Retention Tax is the obligation of the taxpayer to withhold tax when making payments under specific heads (such as rent, commission, payment for professional services, salaries, contracts, etc.) Reply. Thus, to cover these costs, many employers obtain group health insurance plans or “health cards” for their employees or contribute to health and hospitalization benefit plans. Information about Withholding Tax; Withholding Tax Guide 2021(PDF/1,337KB) Withholding Tax Guide 2020(PDF/1,187KB) Types, etc. ISLAMABAD: The insurance companies are required to deduct/collect withholding tax only from persons not appearing on the Active Taxpayers List (ATL) at the time of collection of insurance premium. Among salary deductions, the withholding tax is the most painful to compute as much as it hurts the wallet—except for tax-exempt employees with a monthly salary of PHP 20,833 and less. The FBR said that advance tax to be collected at the time of collection of insurance premium from a person whose name is not appearing in the active taxpayers’ list, by every insurance company in respect of General Insurance Premium and Life Insurance Premium. insurance in the Philippines is subject to a 2% tax on gross premiums, which is collected from every person, company or corporation doing life insurance business of any sort in the country. Income tax in a foreign country by a domestic corporation on foreign-sourced income may be claimed as a deductible expense or as a tax credit against Philippine income tax due on such income. Save my name, email, and website in this browser for the next time I comment. When 2021 starts, it will be another year where I would argue that many investments are expensive. This website uses cookies to ensure you get the best experience on our website. 02-98 SUBJECT : Implementing Republic Act No. Philippines Philippines: General insurance Commercial accounts/ tax and regulatory returns Accounting Tax return Not applicable. What will be the basis of the 2% EWT to be deducted on the premium for the insurance coverage of the vehicle sold to the customer of a TTC-automotive dealer to the Insurance Company considering the information on the insurance policy as follows: Premium (CTPL, OD, TPPD, etc.) Facebook ; Twitter Withholding Tax. 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