Insurance premium taxes reach P1.3 B

MANILA, Philippines – Following succeeding declines as a result of lower tax rates, levies collected from insurance premiums have recovered to their highest level since 2009 as of November last year.

According to data from the Bureau of Internal Revenue (BIR), taxes on premiums hit P1.286 billion for the first 11 months of 2015.

The collection was already the biggest since the P2.002 billion recorded in 2009. Full-year data will be released next month with the entire government budget performance.

“Thanks to much higher base, taxes on insurance premiums rose offsetting rates which were set lower,” Insurance Commissioner (IC) Emmanuel Dooc said in a phone interview yesterday.

Finance Undersecretary and chief economist Gil Beltran, who once handled the government’s micro-insurance efforts, agreed. “This could show more financial inclusiveness in our part. It means more people are getting insurance,” Beltran said.

Under RA 10001 signed in 2009, insurance premium tax rates were reduced to two percent from five percent, causing a two-year downtrend in revenue collections.

From P2.002 billion in 2009, revenues decreased to P1.140 billion in 2010 and to just P795.31 million in 2011, BIR data showed.

It rose but stayed below the billion-peso level in 2012 and 2013 when collections reached P834.38 million and P990.16 million. It hit P1.184 billion in 2014.

Dooc said since it has been five years since RA 10001 was passed, the industry already adjusted and has booked more insurance holders and premiums.

According to IC data, total premiums in the life sector rose 57 percent last year to P16.79 billion.

Their non-life counterparts increased by almost 14 percent to P26.92 billion.

Beltran said the increase could also be attributed to better premium collection by the IC.

“A part of the IC’s budget comes from the premium they collect so obviously they will be more aggressive to collect,” he said.

Dooc said there were efforts before to remove taxes on insurance premiums to align the Philippines with the rest of Southeast Asia, but did not prosper.

One of them was a “sunset provision” in RA 10001 vetoed by then President Arroyo which would have had lowered taxes to zero by 2015.

“But now, I no longer support removing taxes since it is also a funding source for us and the government,” Dooc said.