MANILA, July 25 -- The House of Representatives has approved on third and final reading a bill abolishing the payment of documentary stamp tax and premium tax on all life insurance policies.
House Bill 6017 filed by Reps. Liwayway Vinzons-Chato (Camarines Norte) and Exequiel Javier (Antique) grants the much-needed tax relief to the life insurance industry.
Vinzons-Chato said life insurance is a saving vehicle for an individual and imposing a tax on this type of insurance increases the cost of savings and shrinking its attractiveness as a long-term accumulation of savings.
"Life insurance is increasingly regarded with great importance, it plays a major role in providing economic security," she said.
The Camarines Sur lawmaker said the life insurance industry has the dubious honor of being one of those industries that suffer from recurring taxation in major stages of its cycle.
"These are manifested when the premiums are paid and is subjected to five percent premium tax plus .25 percent of documentary stamp tax and when investment incomes are earned and third stage when benefits are paid," she said.
Vinzons-Chato said imposing taxes on the first stage of insurance sales raises the average price to the consumers, thus discouraging the public from buying the product.
Under the measure, no tax on life insurance premiums shall be collected, effectively repealing Sections 123 and 183 of the National Internal Revenue Code as amended by Republic Act 9243.
Section 199 on documentary stamp tax is further amended to include all policies of insurance or other instrument whereby any insurance shall be made or renewed upon any life or lives. (PNA)