BIR Ruling No. 554-2017

BUREAU OF INTERNAL REVENUE REPUBLIC C+ THE I'HILIPPINES DEPARTMENT OF FINANCE Quezon City

Sec. t73& 184 NIRC: P.D).4 000-00 554-2017 Person to Contact: Chief. Law & Legislative Division Tel Nos. 926-55-36/927-09-63

GOVERNMENT SERVICE INSURANCE SYSTEM Financial Center. Pasay City, 1308 Metro Manila

OIC. Marketing. Underwriting and Claims Office Attention: Atty. Nelo B. Gellaco Insurance Group

Gentlemen:

Government Scrvice Insurance System (GSIS) with the Bureau of Internal Revenue's (BIR) Certificate of T'ax Exemption from the payment of documentary stamp tax (DST) on insurance policy. if any. This refers to your letter dated June 29, 2017 requesting this office to provide the

In your letter, you advised this office that the System shall start collecting DST for every insurance policy which the GSIS shall issue starting July l, 2017 pursuant to Revenue Memorandum Circular (RMC) No. 59-2008 dated August 23, 2008. amending RMC 30-2008. clarifying the taxability of both the life and the non-life insurance industries.

The Circular requires the GSIS to collect by proper billing and remit DST for every insurance policy which it shall issue starting July 1" 2017. The DST shall be computed by multiplying a flat rate of 12.5% with the net premium appearing in the subject policy. For compulsory Third Party Liability, a fixed amount of PhP15.00 shall be due for every Certificate of Cover issued. For the Group Personal Accident Insurance, Group Travel Accident Insurance and Personal Accident Insurance (Optional Non-Life Insurance) coverage. the rate shail be subject to the following schedule pursuant to BIR Memorandum Order (RMO) No. 79-2010 dated October 14. 2010:

does not exceed PhP 100,000.00 exceeds PhP100.000.00 but does not exceed PhP300,000.00 cxceeds PhP300,000.00 but does not exceed PhP500,000.00 exceeds PhP500.000.00 but does not exceed PhP750.000.00 exceeds PhP1,000,000.00 exceeds PhP750.000.00 but does not exceed PhP1,000,000.00 Amount of Insurance Tax Rate PhP 10.00 Exempt 100.00 50.00 25.00 75.00

In reply. please be informed that Section 173 of the Tax Code. as amended, provides that there shalt be levied. collected and paid upon documents, instruments and papers evidencing the act done or transaotion had or the agreement or contract has been perfected.

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DST. On the other hand. Section 184 of the same Code provides that DST shall be based on the anount of premium charged. DST shall be due upon the issuance of the insurance policy and the premium charged on the estimated insurance coverage. as it is reflected on the face of the policy. and which shall be the amount on which the DST due shall be based.

However, Section 199 of the Tax Code. as amended. and as implemented by Revenuc Regulations (RR) No. 13-04 dated Decemher 23, 2004 provides that certificates placed upon documents. instruments and papers for thc national government. made at the instance and for the sole usc of some other branch of the national government. are exempted from documentary stamp tax

"Sec. 199. Documents and Papers not Subject to Stamp Tax --- The provisions of Section 173 notwithstamding. the following instrumenis. documenis. and papers shull be exempt from the documentary stamp tax:

a) Policies of insurance or annuities .

h) Certificates of oath administered to amy government official in his

official capacitv or of ucknowledgement hy any government official in

by any government official. in his official capacity; certificates of the the performance of his official duties; w'ritten appearance in anv court

paper required to he filed in court by any person or party thereto. administration of ouths to any person as to the uuthenticity of any

persons or corporations hy the rules and regulations of the nutional. filed in courts by or for the national. provincial. city:. or municipal poverty: statements and other compulsory information required of governments: uffidavits of poor persons for the purpose ot proving whether the proceedings be civil or criminal; papers und ctocuments

provincial. city. or municipul governments exclusively for stutistical purposes and which are wholly for the use of the hureuu or office tn which they are filed. and not at the instance or for the use or benefit of the person filing them; certified conies und other certificutes placed

governments:. city, or municipal governments, mude at the_instance and for the sole use of some other branch of the national provinciul, cip, or municipul upon documents, _instruments._and papers for the nationul provincial.

to the Bureau of Internal Revenue, being certificates for an agency under the Executive branch of the national government. made at its instance and for its sole use. and for the account of the Bureau of Internal Revenue are exempt from the DST. In view of the foregoing. the certificates of insurance policy that will be issued by GSIS

In relation to the aforementioned exemption. Section 173 of the 'T'ax Code. as amended.

other party thereto who is not exempt shall be the one directly liable for the tax. provides that whenever one party to the taxable document enjoys excmption froni the DS'T. the

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pursuant to Section 39 of Republic Act No. 8291, amending P.D. 1146, otherwise known as the "Government Service Insurance System Act of 1997." We note, however, that the GSIS is. likewise, exempt from all taxes. including DST.

insurance policy. Such being the case. neither the BIR nor the GSIS shall be liable for the DST on the

if upon investigation, it will be disclosed that the facts are different. then this ruling shall be considercd null and void. This ruling is being issued on the basis of the foregoing facts as represented. However.

Very truly yours.

Aaamev

K-1-MCUS Commissioner of Internal Revenue CAESAR R. DULAY 011428