Let us take a look at the life-insurance tax regime in all the 10 Association of Southeast Asian Nations members: Brunei Darussalam, Cambodia, Vietnam, Thailand, Indonesia, Malaysia, Myanmar, Lao PDR, Singapore and the Philippines.
The Philippines has the highest corporate-income tax within Asean at 30 percent of the net taxable income derived from all sources within and without the Philippines. A minimum corporate-income tax of 2 percent of gross income is imposed when the minimum income tax exceeds the regular corporate-income tax.
Of the other nine Asean states, Indonesia and Myanmar comes next at 25 percent, then Lao PDR at 24 percent. Thailand and Vietnam have corporate income-tax rates at 20 percent. Brunei Darussalam had recently reduced its corporate income-tax rates to 18.50 percent. Singapore has a 17-percent standard corporate income-tax rate. Malaysia, on the other hand, has an 8-percent corporate-income tax on the life-insurance fund, which includes investment-linked funds and 24 percent is imposed on shareholder’s fund of a life-insurance company. Finally, Cambodia, has a special income-tax rate of 5 percent on gross premiums. Cambodia, Malaysia and Singapore all have special income-tax rate provisions for life- insurance companies.
Business taxes are applied only in two Asean countries. They are the Philippines and Thailand. In the Philippines a 2-percent premium tax, instead of a value-added tax (VAT), is imposed on total (gross) premiums collected from every person, company or corporation doing life-insurance business. In Thailand, on the other hand, a specific business tax (SBT) of 2.5 percent of the gross receipts from the operation of the business and 10-percent municipal tax on SBT is imposed on the interest and fees for the life-insurance services. This is effectively at 2.75 percent.
The other Asean states impose no such business taxes. Malaysia had previously imposed a 6-percent service tax on life insurance, but later exempted life-insurance businesses from the goods and service tax (GST).
Documentary stamp tax
Four Asean countries impose no stamp duties or documentary stamp tax on life-insurance companies. These are: Singapore, Vietnam, Cambodia and Lao PDR. Meanwhile, the other six Asean countries impose varying rates of stamp duties.
Malaysia imposes a stamp duty of $2.49 (MYR 10) on life-insurance policies exceeding $1,244.49 (MYR 5,000), the highest in Asean. Indonesia imposes a stamp duty of $0.228 (IDR 3,000) on insurance contracts worth $18.97 to $75.89 (IDR 250,000 to IDR 1 million); and $0.455 (IDR 6,000) for insurance worth more than $75.89 (IDR 1 milion), the second highest in Asean. The Philippines imposes a DST dependent on the value of the insurance that ranges from $0.213 to $2.13 (P10 to P100). Life-insurance policies not exceeding $2,127.67 (P100,000) are exempt from DST. Brunei Darussalam imposes $0.074 (BRD 0.10) for every $741.52 (BRD 1,000) of the sum insured. Thailand imposes $0.028 (THB 1) for every $56.91 (THB 2,000), but only to a maximum of $0.569 (THB 20) with any renewal of life-insurance policy subject only to half the rate in the original policy. Myanmar imposes stamp duty with a range from $0.009 to $0.026 (MMK 10 to MMK 30).
Tax on variable unit-linked or investment-linked insurance
Five Asean countries have no particular tax laws on variable unit-linked (VULs), other than those already imposed on regular life-insurance contracts. These five are: Brunei Darussalam, Cambodia, Myanmar, Thailand and Lao PDR. For Vietnam, as of 2017, there is likewise no particular tax law on VULs. But generally, investment incomes earned by individuals are subject to a 5-percent personal-income tax, while management fees of companies are taxed at 20 percent.
In Malaysia a special income-tax rate of 8 percent is imposed on investment-linked funds.
In the Philippines the 2-percent premium tax is only imposed on the insurance portion of the VUL and not on the investment portion. On the other hand, the management fee earned by the insurance companies, for the management of the investment portion, is subject to 30-percent regular corporate- income tax or 2-percent minimum corporate-income tax, whichever is higher and 12 percent VAT if the insurance company is VAT-registered or 3 percent if not VAT registered.
In Singapore income tax is imposed on investment-linked funds. In Indonesia investment income from VULs is subject to a final tax or nontaxable. Management fees are subject to VAT.
Value-added tax or goods and service tax
VAT or GST is not applied on any life- insurance business in Asean.