Buyers of nonlife insurance unduly taxed

It is a fact that the buyers of nonlife insurance products are subject to an array of taxes based on the premium charged by the insurers. At present, the government collects the following taxes from nonlife-insurance policyholders: 12 percent value-added tax, a 12.5 percent documentary stamp tax, a 2 percent fire-service tax and a 0.15 percent to 0.75 percent local government tax.  For example, those who purchase motor insurance will have to shoulder an additional tax amounting to approximately 25 percent of the premium, while the buyers of fire insurance are subject to an extra 2-percent fire-service tax or a total of 27 percent of the premium. Even microinsurance products are subject to the same tax rates and this is truly a burden on the low-income sector of our country.

Likewise, the Philippine Insurers and Reinsurers Association, the nonlife association of the insurance industry, as well as the Insurance Commission, have noted that the high taxes levied on buyers of nonlife-insurance policies was counterproductive and, thus, have jointly supported the reduction of the present rate of taxes to a more reasonable level.

In this regard, they supported House Bill  3235, which was introduced by Representative Karlo Alexei  B. Nograles at the 16th Congress of the House of Representatives, which seeks to reduce the taxes on nonlife-insurance policies to a more reasonable rate of 2 percent of the premium and documentary stamps tax ranging from P10 to P100 per year similar to that now enjoyed by life-insurance policyholders.

In the long term, we believe the approval of this bill in the present Congress will be beneficial to both the insurance industry and the government, as increased sales of non-life insurance will be generated by the reduction of taxes.


It is a sad commentary, but why should nonlife-insurance buyers be so heavily taxed to protect their properties and assets against fortuitous events, such as fire and natural disasters.


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