THE Philippine Insurers and Reinsurers Association (Pira) said it will continue to push for the decrease in tax rates imposed on the nonlife insurance industry, to be on a par with its Asean counterparts and to help maintain a competitive environment.
Pira Deputy Chairman Michael F. Rellosa said the organization is still hopeful its proposal to lower tax rates for nonlife companies in the country will still be considered by the current administration.
“I am not optimistic but we will not give up the fight,” Rellosa told financial reporters over the weekend.
At present, the services and products the nonlife insurance sector offers is taxed at a rate of 27.5 percent, comprising a 12-percent value-added tax (VAT), 12.5-percent documentary stamp tax (DST), 2-percent fire service tax, and a rate between 0.15 percent to 0.75 percent for local government tax with the rate depending on which product area (e.g., motor, fire, earthquake) the company is operating in.
When compared to the taxes paid by the life- insurance sector, the rate is way higher, since it is only taxed at a mere 5 percent.
Under the previous administration, House Bill (HB) 3235, or An Act Rationalizing the Taxes Imposed on Non-Life Insurance Policies, which was filed by Rep. Karlo B. Nograles of Davao, sought to lower the overall tax imposed on nonlife insurance companies to make it at par with life-insurance rates of 5 percent. The bill was not signed by then-President Benigno S. Aquino III.
Last year Rep. Romero S. Quimbo of Marikina told insurance executives at a Pira conference he would support the refiling of the bill that seeks to lower the taxes being paid by Filipinos who buy nonlife insurance in the current administration.
“We are continuing our lobby, and as a matter of fact, Congressman Quimbo refiled the bill, but if it’s going to progress, that is a different story,” he said.
Rellosa said since the government plans to pursue increasing infrastructure projects in the country, taxes will need to be collected to fund not just its infrastructure build up, but also its various programs.
“You see, it goes against the plan of the government. The government wants to fund all these projects. As a matter of fact, they are actually increasing taxes so I don’t think policy speaking, we are going to get it in any ground,” he said.
The Duterte administration plans to gradually increase the public-infrastructure budget to P1.2 trillion in 2018; P1.3 trillion in 2019; P1.5 trillion in 2020; P1.7 trillion in 2021; and P1.9 trillion in 2022.
“Dutertenomics”, which is President Duterte’s economic strategy to dramatically raise funds in large part through his proposed tax-reform program, and spend big on infrastructure, human-capital formation and social protection to sustain the growth momentum, attract investments and create jobs, achieve economic inclusion and transform the Philippines into an upper-middle-income country by 2022, by which time poverty incidence will have been reduced to 14 percent.
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