CONGRESS is being asked to fast-track passage of an enabling law for tax-free employees’ health insurance premiums paid by their employers.
The remedial legislation, embodied in Senate Bill 2112, was filed by Sen. Juan Edgardo M. Angara, who earlier called out the Bureau of Internal Revenue for issuing Revenue Memorandum Circular (RMC) 50-2018, which taxed group health insurance premiums.
Angara, chairman of the Senate Ways and Means Committee that conducted hearings on the Duterte administration’s Tax Reform for Acceleration and Inclusion, noted that “such issuance was not included” among the provisions of the so-called TRAIN law embodied in Republic Act 10963.
The senator lamented that the BIR Memorandum Circular, issued in the wake of concerns on the TRAIN’s income tax provisions, only “caused confusion” as it specifically stated that the medical insurance premiums paid by employers for their employees, whether rank-and-file or managerial or supervisory, and their dependents shall be included as part of bonuses and benefits, and therefore shall be subject to income and fringe benefit tax.
“It should be noted that RA 10963 did not amend the tax treatment of health premiums nor was it intended, in any way, to diminish the take-home pay of taxpayers by subjecting them to the P90,000 tax-exempt bonus,” Angara said.
In filing SB 2112, Angara affirmed that the tax-reform measure was enacted “primarily to increase the purchasing power of each taxpayer who has been overburdened by the inequitable and unprogressive income tax that has not been changed for almost two decades.”
Angara added that “the health of its citizens remains a primary concern of the government, thus, all support and assistance should be given to ensure that Filipinos, especially the workers, remain fit and healthy.”
He recalled that RMC 50-2018 issued on May 11 provides that “premium on health card paid by the employer for all employees, whether rank-and-file or managerial or supervisory, under a group insurance should be included as part of other benefits of these employees which are subject to the P90,000 threshold.”
This simply means, he said, that medical insurance premiums paid by the employers for all employees should not be subjected to income tax and fringe benefit tax.
He noted that under the TRAIN law, employees’ bonuses and other benefits amounting to P90,000 and below should be tax-free, adding that beyond P90,000 threshold is already taxable
In effect, Angara said, the BIR issuance “reverses its previous rulings and regulations that premium on health cards shall be tax-free.”