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. 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. The new rate of two percent (2%) shall apply only to insurance policies that will be issued after the effectivity of this Act: Provided, however, That insurance policies taken out before the effectivity of this Act but the premiums are not yet fully paid, the new rate of two percent (2%) shall be applied to the remaining balance and for the remaining years. This Circular is being issued to revoke BIR Ruling Nos. 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.” 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. The Philippines imposes a DST dependent on the value of the insurance that ranges from $0.213 to $2.13 (P10 to P100). 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. It merely increased the FBT rate from 32 percent to 35 percent and amended the PIT rates, among others. However, TRAIN 1 did not amend the coverage of FBT or the income tax provisions of the Tax Code on health insurance premiums. 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%. Thus, the exemption from FBT of group insurance premiums does not necessarily mean they are exempt from income tax on compensation income. Withholding tax 3. 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. Premium taxes Not subject to premiums tax. 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 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.) Next Post: Non Taxable Employee Benefits – “DE MINIMIS” Benefits. 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. I. 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 … If the gross income for the year does not exceed P720,000, then a 10% withholding is required. 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). 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 14-2000; and for Other Purposes. 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.) Non-individuals have a lower income bracket but have higher withholding rates. However, TRAIN 1 did not amend the coverage of FBT or the income tax provisions of the Tax Code on health insurance premiums. ... including an insurance company. 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. The implementation of this issuance shall take effect immediately. 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. It merely increased the FBT rates from 32 percent to 35 percent and amended the personal income tax PIT rates, among others. She acknowledges the contribution of Atty. Thank you. 8-2018 and 11-2018) implementing TRAIN 1 (Republic Act No. When I think of Filipino small and medium enterprises entrepreneurs, my father is the first person that comes to mind. However, if such premiums are paid for group insurance of employees, they are expressly exempt from and not subject to FBT. Reply. 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. 8-98 and 13-99, as Amended by Revenue Regulations No. Case digest Insurance premiums on group health insurance are not akin to bonuses or incentive pays. When 2021 starts, it will be another year where I would argue that many investments are expensive. 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. 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.) Stay Connected . 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. Medical and hospitalization costs in the Philippines are not cheap and could be daunting for ordinary employees. Consequently, personal income tax is collected from the employee through the payroll and the employer acts as the withholding agent. To subject them to withholding tax on compensation would mean the employers will have to “gross up” the payments and pay additional cash, as withholding tax, to the government. Employers are required by law to deduct the following items from employee salaries every month: 1. The legislative changes for withholding tax are diverse. 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. The amounts paid for group insurance premiums may not be known to the employee or even directly attributable to him or her. (Read more article: 13 Approved Train Law Philippines 2019) 2. 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. Facebook ; Twitter 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 … Updated up to June 30, 2020 . 6 comments ... Just want to ask the withholding Tax rate on Security/messengerial and Security Expense? Final withholding tax. 8424 (the Tax Code of 1997). 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. 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. Thus, there may difficulty in allocating the amount of premiums to employees concerned. Information about Withholding Tax; Withholding Tax Guide 2021(PDF/1,337KB) Withholding Tax Guide 2020(PDF/1,187KB) Types, etc. Health premium payments are allowed as deductible expenses even if not subjected to withholding tax on compensation. 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. April 17, 1998 REVENUE REGULATIONS NO. The tax is thus withheld or deducted from the income due to the recipient. Creditable Withholding Tax on Top Withholding Agents. 10963). 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. - P26,000.00 VAT - 2,600.00 Doc. Life-insurance policies not exceeding $2,127.67 (P100,000) are exempt from DST. - 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 … A tax withholding agent is also required to withhold tax from non-resident aliens engaged in trade or business in the Philippines. Copyright © The Manila Times – All Rights Reserved. (Read more article: 13 Approved Train Law Philippines 2019) 2. 8-98 and 13-99, as Amended by Revenue Regulations No. Creditable Withholding Tax on Top Withholding Agents. Employers and the employees would most welcome such a reversal. However, given that RMC 50-2018 is the most recent BIR issuance, there is a risk that BIR will issue deficiency withholding tax assessment if health premiums paid after the issuance of RMC 50-2018 dated May 11, 2018, were not subjected to withholding tax on compensation or FBT. In effect, employers who look out for the health concerns of their employees, as well as their employees, are being penalized. 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. 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 … – Insurance agents and insurance adjusters ... Tax Treatment of Fringe Benefits in the Philippines. There is also no doubt the premiums for group insurance are paid for the convenience of the employer. 36(A)(4) of the Code explicitly states that premiums paid for any life insurance policy is not deductible. Premiums Written on direct business plus assumed premiums less cessions and retrocessions. Tardiness 5. However, if such premiums are paid for group insurance of employees, they are expressly exempt from and not subject to FBT. Loan payments 4. Philippines Philippines: General insurance Commercial accounts/ tax and regulatory returns Accounting Tax return Not applicable. 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. 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. Q16. The implementation of this issuance shall take effect immediately. This Circular is being issued to revoke BIR Ruling Nos. 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. 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. Consequently, the CIR assessed against PETITIONER .withholding tax on FACTS: The petitioner Philippine Guaranty Co., Inc., a domestic insurance the ceded reinsurance premiums. Philippines Philippines: General insurance Commercial accounts/ tax and regulatory returns Accounting Tax return Not applicable. 50-2018 (RMC 50-2018) which declares, among others, that premiums on health cards paid by employers for all employees, whether rank and file or managerial/supervisory, for group insurance shall be included as part of other employees’ benefits which are subject to the P90,000 income tax exemption threshold. The 10% withholding tax rate shall be applied in the following cases: (1) the payee failed to … 6 comments ... Just want to ask the withholding Tax rate on Security/messengerial and Security Expense? 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. RMC 50-2018, however, finds support in a Court of Tax Appeals (CTA) case, which found that premium payments for employee group insurance are subject to income tax. 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. 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 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. Tax on Life insurance premiums: 2%: WB070: WB : Tax on Overseas Dispatch, Message or Conversation from the Philippines: 10%: WB090: WB : Business tax on Agents of Foreign Insurance companies - Insurance Agents : 4% : WB120 : WB : Business tax on Agents of Foreign Insurance companies - owner of the property: 5%: WB121: WB : Tax on international carriers: 3%: WB130: WB : … 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. 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. 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. Property losses sustained in relation to the business and not indemnified by insurance or other means are deductible from gross income. Every employer is required to deduct and withhold taxes on employees’ compensation in accordance to the Philippine Law. 3-98 (RR 3-98), the regulations implementing Section 33 of the Tax Code relative to the FBT provisions introduced by Republic Act No. 02-98 SUBJECT : Implementing Republic Act No. Those changes also affect the reimbursement of Old Age and Survivors Insurance (‘OASI’) contributions. 10963). — A final withholding tax equivalent to fifteen (15%) shall be withheld by the withholding agent from the gross income of alien individuals occupying managerial or technical positions in offshore banking units established in the Philippines, as salaries, wages, annuities, compensations, remuneration and other … Updated up to June 30, 2020 . 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