CEBU, Philippines - An insurance firm will not be paying local business taxes to the Cebu City government starting next year until its more than P4million overpayment is consumed.
This was the agreement reached between Philippine Axa Life Insurance Corporation and the city government before the Philippine Mediation Center which was approved by the Regional Trial Court.
RTC Branch 12 Judge Estella Alma Singco has terminated the civil case filed by Axa Life Insurance Corporation against the city government through then city treasurer Ofelia Oliva following a compromise agreement.
Axa earlier demanded a refund of P4,271,645.21 from the city government representing overpayment of their local business taxes for 2008. Then city treasurer Oliva refused to refund prompting the insurance firm to file a civil case.
During the mediation process, both parties agreed that instead of the refund, the city government will have to credit the amount in the future tax liabilities of the insurance firm.
“The City Treasurer shall grant and issue, within fifteen days from the RTC’s approval of this agreement, tax credit certificates in favor of AXA Life Insurance covering the tax credit which shall be applied against AXA Life Insurance’s liability for local business taxes only, excluding all regular fees and such other monetary liability,” the agreement reads.
“The tax credit certificates may arise beginning the first quarter of the taxable year 2012 to the subsequent taxable years until the balance of the said total claim has been fully applied,” it added.
Axa, in asking for the refund of the amount mistakenly paid by them, cited provisions in the Department of Finance Local Finance Circular.
“Section 2(b)(1) (vii) and (viii) exclude from the taxable gross receipts the portion of insurance premiums actually collected pertaining to: (a) variable contracts; and (b) excess of the amounts necessary to insure the lives of variable contracts,” the petition reads.
The Insurance Company said based on the provision cited they are entitled to have a refund. According to them, their supposed tax liability for 2008 was only P230,966.73 but have overpaid more than P4 million.
They said in 2007 they received the amount of P864,544,075.07 as premium from its variable contracts. The said amount was included in the total premium of P904,793,173.08, which was erroneously used as taxable based in the computation. (FREEMAN)