BIR clarifies taxability of insurance companies

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					                                                                                                                             BIR PRIORITIES
                                                                                                                     * Exceed BIR revenue target of
                                                                                                                       P 845 Billion for 2008
                                                                                                                     * Improve taxpayer satisfaction and
Volume 10 No. 8
                                                                                                                     * Improve taxpayer and taxfiler base

BIR clarifies taxability of insurance
                                                           undertakings that have evolved and                          shall refer to those incurred costs
           By Aileen Marquez                               expanded through the years – from                           which are exclusively related or other-
THE BIR HAS clarified the taxability                       generation of premiums from insurance                       wise considered indispensable to the
of insurance companies with res-                           contracts to conduct of other ancillary                     creation of the revenue from their
pect to the proper computation of                          services.                                                   business activity as an insurance
their Minimum Corporate Income                                  For purposes of computing the                          company, including the generation of
Tax (MCIT), Business Tax and                               gross income on the sale of services,                       investment income not subject to final
Documentary Stamp Tax (DST).                               which shall be the basis of the 2%                          taxes.
     The clarification was initially                       MCIT of life and non-life insurance                              The said direct costs and revenue-
made through the issuance of Reve-                         companies, the gross revenue shall                          related deductions shall be limited to the
nue Memorandum Circular (RMC)                              include direct premium and reinsurance                      following: salaries, wages and other
No. 30-2008 last April 1. The Circular                     assumed (net of returns and cancel-                         employee benefits of personnel directly
was subsequently amended by RMC                            lations); miscellaneous income; invest-                     engaged in underwriting, claims and
No. 59-2008 last August 23 as a result                     ment income not subject to final tax;                                         BIR clarifies ... to p. 2
of the dialogues and consultations                         released reserve; and all other items
held by top BIR officials with repre-
sentatives of the insurance industry.
                                                           treated as gross income under Section
                                                           32 of the Tax Code, as amended.
                                                                                                                       BIR adopts new
     The said Circulars were issued to                          The costs of services or direct cost
                                                           and identifiable direct revenue-related
                                                                                                                        procedures to
help insurance companies understand
the taxability of their various business                   deductions of insurance companies                            stop spurious
Aspe takes oath as full-fledged                                                                                        input tax claims
Deputy Commissioner                                                                                                             By Eleonor Capili

                                                                                                                       IN ORDER TO stop the illegal use of
                                                                                                                       Official Receipts/Sales Invoices (OR/SI)
                                                                                                                       of dissolved business establishments
                                                                                                                       in claiming input taxes, the BIR issued
                                                                                                                       Revenue Memorandum Circular (RMC)
                                                                                                                       No. 56-2008 last August 20 to clarify the
                                                                                                                       procedures on the processing of appli-
                                                                                                                       cation for cancellation of business
                                                                                                                            Pursuant to the Circular, upon filing
                                                                                                                       of the duly accomplished “Notice of
                                                                                                                       Closure or Cessation of Business”, the
OATH TAKING. DCIR Nelson M. Aspe (middle) takes his oath as full-fledged BIR Deputy Commissioner before Finance
Secretary Margarito B. Teves and Commissioner Lilian B. Hefti last August 28 at the BIR Executive Conference Room.     taxpayer shall submit to the BIR, for
                                                                                                                       evaluation, the establishment’s list of
                                                           Margarito B. Teves last August 28 at                        inventory of goods, supplies and capital
             By Raul Agcaoili
                                                           the BIR Executive Conference Room                           goods; list of unused ORs, SIs and other
                                                           before the start of the monthly                             accounting forms; and list of certificates,
AFTER MORE THAN a year of per-                             executive meeting with the Secretary.                       permits, notices, etc. issued to the
forming in an Officer-In-Charge                            The ceremony was witnessed by                               taxpayer by the BIR.
capacity, DCIR Nelson M. Aspe finally                      Commissioner Lilian B. Hefti, the                                Upon effectivity of the closure or
took his oath as full-fledged Deputy                       Deputy Commissioners and other                              cessation of business, the taxpayer shall
Commissioner for the BIR Operations                        top revenue officials.                                      submit and/or surrender to the BIR
Group.                                                         DCIR Aspe is a CPA-lawyer who                           (through the Revenue District Office
    The oath taking ceremony was
administered by Finance Secretary                                                    Aspe takes... to p. 2                                 BIR adopts... to p. 2
2                                              NATIONAL
BIR clarifies ...from p. 1                     business activities of life insurance         on life insurance subject to Premium
benefits, actuary and policy owner             companies for business tax (whether           Tax and not VAT. The said RMC also
services; commissions on direct writings/      premium tax, Value-Added Tax [VAT] or         clarified that the re-issuance fees,
reinsurance; cost of facilities directly       Gross Receipts Tax [GRT]) and DST was         renewal fees as well as penalties paid
utilized in providing the service such as      clarified, particularly those pertaining to   to the life insurance company are
depreciation or rental of equipment used       the following types of income: direct         likewise considered as income of the
and cost of supplies; inspection and           writings/premiums; management fees,           life insurance company for services
medical fees; claims, losses, maturities and   rental income, or other income/fees; and      rendered to customers and, therefore,
benefits net of reinsurance recoveries;        investment income realized from the           subject to VAT or Percentage Tax,
additions required by law to reserve fund;     investment of premium earned and those        whichever is applicable.
and reinsurance ceded.                         realized from the investment of funds              The RMCs likewise clarified the
      Investment expenses shall not form       obtained from others. The manner of           taxability of other financial services/
part of the direct cost nor a deductible       apportionment of investment income to         products sold by the life insurance
expense in the determination of the net        determine which portion is exempt and         companies, namely: the Variable Unit
taxable income. However, investment            which portion is subject to the GRT was       Link and the Premium Deposit Fund, as
expenses relating to investment income         also clarified.                               well as the taxability of non-life in-
that has not been subjected to final tax,           In RMC No. 59-2008, it was empha-        surance companies insofar as the
although not forming part of the direct        sized that premium on Health and              business taxes and DST are concerned.
cost, shall be allowed as deduction to         Accident Insurance, whether received          (For more details, see full text of
arrive at the taxable income.                  by a life or non-life insurance com-          RMC Nos. 30-2008 and 59-2008 at
      The taxability of the various            pany, shall be considered as premium
Aspe takes...from p. 1                         served as Chief of Staff at the Office        conduct of campaign for the imple-
joined the BIR in 1989 as Revenue              of the DCIR, Operations Group for             mentation of the Expanded VAT Law.
Examiner at the Value-Added Tax Divi-          five years and as Regional Director                DCIR Aspe also serves as the
sion. Because of his competence and            of RR 8- Makati for almost a year.            Director of the Philippine Institute of
dedication to the revenue service, he rose          DCIR Aspe was a member of the            Certified Public Accountants (PICPA),
from the ranks and assumed various             VAT Review Committee and has been             Eastern Metro Manila Council; Direc-
important positions in the Bureau.             actively involved in the drafting of          tor of the CPA-Lawyers Association of
     Prior to his designation as OIC-          various important Revenue Regulations         the Philippines; and Director of the BIR
Deputy Commissioner, Atty. Aspe                issued by the BIR, as well as in the          CPA-Lawyers Society.

BIR adopts ...from p. 1                        destroyed/cancelled documents and             BIR searches ...from p. 5
where the taxpayer’s head office is            warned them that they shall be held
registered) all unused ORs, SIs and            liable if the said documents are sub-
                                                                                                  Said revenuers were nominated
other accounting forms, for destruc-           sequently used as a source of spurious
                                                                                             based on their outstanding performance/
tion. Likewise, all BIR-issued Notices,        input taxes.
                                                                                             contribution to the revenue service;
Permits, Certificate of Registration, etc.          The BIR will issue another RMC to
                                                                                             behavioral performance (i.e. commitment
shall also be surrendered, for                 circularize the names of taxpayers who
                                                                                             to public service, professionalism, just-
cancellation.                                  have ceased business operations. (For
                                               more details, see full text of RMC No.        ness and sincerity, responsiveness to
     Commissioner Lilian B. Hefti direc-
ted taxpayers to properly dispose the          56-2008 at                    public and simple living); reliability and
                                                                                             consistency of performance, and other
128 Bacolod ...from p. 3                       skills and customer assistance skills to      similar circumstances or considerations
training program for the Collection            further improve their delivery of service     in favor of the nominee.
Group and Assessment Group, res-               to taxpayers.                                      From the 16 official nominees, the
pectively, which both started last                  The GCRO topnotchers who were            top eight (8) nominees shall be deter-
February.                                      recognized during the graduation              mined by the Preliminary Board of
     The pool of lecturers, led by             ceremony are Arlen Amarador, Gene             Judges consisting of the Commissioner,
Regional Director Rodita Galanto and           Rose Gallo and Ma. Riza Ramos (for the        Deputy Commissioners of Operations
Assistant Regional Director Aynie              Collection Group); and Ma. Anna Liza          Group and Resource Management
Mandajoyan, discussed various                  Valencia, Grace Rikelle Lapu-os and           Group and other officials authorized by
topics in taxation, such as collection         Monina Mata (for the Assessment
and audit procedures for Income Tax,           Group).                                       the Commissioner.
Percentage Tax, Value-Added Tax,                    Assistant Commissioner Leonor                 The 8 finalists shall then be referred
Transfer Tax, Excise Tax and Docu-             Villalon-Rogers from the Bureau’s             to the Final Board of Judges (FBJ) to be
mentary Stamp Tax.                             Human Resource Development Service            constituted by TMAP. The FBJ shall
     The participants were also trained        graced the graduation ceremony as             select 1 winner, which shall be an-
on how to improve their communication          guest speaker. (By Lizelda Lofranco)          nounced and awarded on October 21.
                                                    REGIONAL                                                                                               3
Bacolod region recognizes top taxpayers
and withholding agents
         By Lizelda Lofranco
RR 12, BACOLOD CITY – The Regional
Office recognized its top taxpayers and
withholding agents during the regional
celebration of the BIR 104th founding
anniversary held last August 8 at the
Provincial Multi-Purpose Gymnasium in
Bacolod City.
     The awardees are top taxpayers of
the four Revenue District Offices
(RDOs) of RR 12, namely: RDO Nos. 76
– Victorias City, 77 – Bacolod City, 78 –
                                                    TOP TAXPAYER: Ramon E. Kilayko ( 3rd from left) receives the Plaque of Recognition from BIR officials (L-R) Revenue
Binalbagan and 79 – Dumaguete City.                 District Officer (RDO) Jonah Ruth Alonte, Asst. Commissioner Leonor Villalon-Rogers, OIC-Regional Director Rodita
The taxpayer-awardees were selected                 Galanto, OIC-Asst. Regional Director Aynie Mandajoyan and OIC-Asst. RDO Lily Lopez.
because of their correct and timely                 Management Corporation; and ACM                              Province of Negros Occidental;
payment of taxes and/or remittance of               Commodities, Inc.                                            Department of Public Works and
withholding taxes, which contributed                     The Top Withholding Agents in                           Highways, 4th Engineering District; and
significantly to the region’s good                  the private sector were VCM Rural                            Department of Education - Negros
collection performance in CY 2007.                  Electric Service Cooperative, Inc.;                          Oriental.
     Awarded as Top Individual Tax-                 Mandalagan Commodities, Inc.; Negros                              Regional Director Rodita Galanto
payers were Isidoro Be; Ramon and                   Occidental Electric Co.; and Siliman                         led the awarding ceremony, together
Yolando Kilayko; Benjamin Jalandoni;                University. The Top Withholding                              with Assistant Commissioner Leonor
and Sylvia Uy. The Top Corporate                    Agents in the government sector were                         Villalon-Rogers, Asst. Regional Director
Taxpayers were Sagay Central, Inc.;                 City Government of Sagay; Department                         Aynie Mandajoyan and the four
Va l l a c a r Tr a n s i t , I n c . ; G a n e t   of Education - Negros Occidental;                            Revenue District Officers of the region.

     Cebu region participates in                                                                                   128 Bacolod
              job fair                                                                                               revenuers
          By Judith Mondigo                                                                                       finish General
RR 13, CEBU CITY – The region
participated in the Career and Entre-
                                                                                                                  Course for ROs
preneurship Fair organized by JobsDB
Philippines, Inc. Cebu last July 10 and                                                                          RR 12, BACOLOD CITY – The region
11 at SM City – Cebu.                                                                                            culminated its conduct of the General
      The said Fair aimed to provide job                                                                         Course for Revenue Officers (GCRO)
opportunities for the unemployed and                JOB FAIR. Manning the BIR booth during the Career and        with a graduation ceremony held last
                                                    Entrepreneurship Fair held last July 10 and 11 at SM City-
to encourage more people to enter into              Cebu are (L-R) Amelia Montero, Alan Bayawa, Samuel
                                                                                                                 August 7.
entrepreneurship to spur the estab-                 Capada and Marivic Meñoso.                                        A total of one hundred twenty-eight
lishment of small- and medium-scale                 distributed flyers on the Bureau’s                           (128) revenuers composed of 73
businesses in the region.                           Premyo Sa Resibo (PSR) raffle promo                          Collection and Seizure Agents and 55
      Revenue officials and employees               and other tax information materials as                       Revenue Officers from the Assessment
from the Taxpayer Service Section of                part of their tax campaign activities for                    Division, Special Investigation Division
Revenue District Office Nos. 80 –                   the year.                                                    and Revenue District Offices of
Mandaue City, 81 – Cebu City North, 82                   Regional Director Jose Tan and                          Victorias, Bacolod, Binalbagan and
– Cebu City South and 83 – Bulacao,                 Asst. Regional Director Teresita Dizon                       Dumaguete City attended the course.
Talisay City manned a booth where                   expressed optimism that through the                               The GCRO is a training package
jobseekers and entrepreneurs submitted              BIR’s participation in the Fair, the region                  being conducted to hone the collection
their applications for Taxpayer Iden-               will be able to expand its taxpayer base                     and audit skills of revenuers assigned
tification Number (TIN) and registration            as well as reach out to more taxpayers,                      in tax assessment and collection
requirements for business.                          which will eventually lead to increased                      positions. It is an 87-hour and 178-hour
      During the Fair, revenuers also               tax collections.                                                                   128 Bacolod ... to p. 2
4                                      FEATURES
                              New Revenue Issuances
RR No. 8-2008 Clarifies that the            RMC No. 51-2008 Circularizes CSC                  RMC No. 57-2008 Notifies the loss of
transactions of Bangko Sentral ng           Memorandum Circular No. 03, s. 2001               2 sets of unused BIR Form No. 2524 –
Pilipinas entered into in the exercise of   entitled “Revised Policies on Merit               Revenue Official Receipt
its governmental/regulatory authority       Promotion Plan”
are outside of the coverage of the                                                            RMC No. 58-2008 Clarifies the time
Gross Receipts Tax                          RMC No. 52-2008 Circularizes Memo-                within which to reckon the redemption
                                            randum Circular No. 04, s. 2005 entitled          period on foreclosed asset and the
RMO No. 28-2008 Prescribes the              “Amendment to Policy No. 12 of CSC                period within which to pay Capital Gains
policies, guidelines and procedures in      MC No. 3, s. 2001 and Clarification of            Tax or Creditable Withholding Tax and
the reporting, recording, and monito-       the Functions and Responsibilities of             Documentary Stamp Tax on the foreclo-
ring of attendance of revenue officials     the Personnel Selection Board”                    sure of real estate mortgage by those
and employees                                                                                 governed by the General Banking Law
                                            RMC No. 53-2008 Notifies the loss of              of 2000, as well as the venue for the
RMC No. 43-2008 Authorizes the              1 pad of unused Accountable Form No.              payment of these taxes
manual filing of tax returns of tax-        51 (AF51)
payers enrolled in Electronic Filing                                                          RMC No. 59-2008 Amends certain
and Payment System (eFPS) due to            RMC No. 54-2008 Circularizes the list             portions of RMC No. 30-2008 on the
technical problems encountered              of Tax Credit Certificates and Dis-               taxability of insurance companies for
                                            bursement Vouchers for tax refunds                Minimum Corporate Income Tax, Busi-
RMC No. 44-2008 Circularizes the full       issued for the month of July 2008                 ness Tax and Documentary Stamp Tax
text of Department Order No. 9-08                                                             purposes
relative to the implementing rules and      RMC No. 55-2008 Provides the dead-
regulations on the accessibility of         line of corporate taxpayers for the filing        RMC No. 60-2008 Notifies the loss of
taxpayer information between the BIR        of 2nd Quarter Income Tax return and              several Revenue Official Receipts-BIR
and the LGUs for tax collection pur-        clarifies the procedure in the filing of          Form No. 2524
poses                                       tax returns, among others
                                                                                              RMC No. 61-2008 Encourages par-
RMC No. 45-2008 Circularizes the list       RMC No. 56-2008 Clarifies the proce-              ticipation to the celebration of the 19th
of Tax Credit Certificates and Disburse-    dure on the handling of taxpayer’s                National Statistics Month in October
ment Vouchers for tax refunds issued        application for cancellation of business          2008
for the month of May 2008                   registration and issues warning on the
                                            use of Official Receipts/Sales Invoices           RMC No. 62-2008 Notifies the loss of
RMC No. 46-2008 Clarifies issues            of dissolved businesses for purposes              4 sets of unused BIR Form No. 1954 -
concerning common carriers by air and       of claiming input taxes                           Certificate Authorizing Registration
their agents relative to the revenue and
receipt from transport of passengers,
goods/cargoes and mail and from
excess baggage                                 Happy Birthday
                                               Happy Birthday
RMC No. 47-2008 Prescribes the
procedures in handling taxpayers’
                                              Chief Pedro D. Ramos                  Aug. 01   RDO Isidro T. Casals, Jr.               Aug. 15
request for transfer of registration          RDO Cynthia T. Cabuguas               Aug. 01   RDO Nerissa C. Agraam                   Aug. 15
                                              Chief Ruth C. Bagaloyos               Aug. 02   OIC-Chief Renato L. Ruiz                Aug. 15
                                              OIC-Chief Simeon D. Abella Jr.        Aug. 02   OIC-RDO Evangeline S. Abanilla          Aug. 15
RMC No. 48-2008 Circularizes the list         Asst. Chief Oswaldo C. Adornado
                                              ARDO Carlos G. Tambal
                                                                                    Aug. 04
                                                                                    Aug. 04
                                                                                              RDO Ramon T. King Jr.                   Aug. 17
                                                                                              Chief Nelly S. Ibo                      Aug. 18
of Tax Credit Certificates and Disburse-      Chief Nona P. Gatbonton               Aug. 05   OIC-RDO Roberto S. Bucoy                Aug. 18
                                              OIC-RDC Head Victor O. Baylon         Aug. 05
ment Vouchers for tax refunds issued          OIC-Asst. Chief Rhoda A. Virganio     Aug. 05
                                                                                              Asst. Chief Gregoria A. Pacho
                                                                                              OIC-Chief Alice SA Gonzales
                                                                                                                                      Aug. 19
                                                                                                                                      Aug. 20
for the month of June 2008                    OIC-Chief Bobby U. Labajo
                                              OIC-Asst. Chief Nicanor S. Ventura
                                                                                    Aug. 06
                                                                                    Aug. 06
                                                                                              Chief Evelyn M. Albano                  Aug. 21
                                                                                              Asst. Chief Yolanda C. Magsumbol        Aug. 22
                                              OIC-Asst. Chief Bernardo D. Gomez     Aug. 06   Chief Oscar R. Mañalac                  Aug. 24
                                              OIC-Chief Cynthia A. Fuentes          Aug. 08   OIC-Chief Erotida M. Sibal              Aug. 24
RMC No. 49-2008 Clarifies the com-            RDO Gerry O. Dumayas                  Aug. 10   ARDO Danilo G. Lino                     Aug. 24
position of the National Evaluation           ARDO Ester M. Campos
                                              OIC-Reg. Dir. Ma. Nieva A. Guerrero
                                                                                    Aug. 10
                                                                                    Aug. 12
                                                                                              OIC-RDO Maria Thelma F. Pulhin
                                                                                              OIC-RDO Noel B. Gonzales
                                                                                                                                      Aug. 25
                                                                                                                                      Aug. 27
Board                                         OIC-ARDO Benjamin B. Virtucio         Aug. 12   OIC-Asst. Chief Lizabel M. Valderama    Aug. 28
                                              Chief Claire F. Corpus                Aug. 13   ARDO Roger G. Cadavas                   Aug. 29
                                              RDO Ramer D. Narvaez                  Aug. 13   OIC-Asst. Reg. Dir. Teresita M. Dizon   Aug. 30
RMC No. 50-2008 Notifies the loss of          Chief Marcelina P. Tawanna
                                              Asst. Reg. Dir. Mamapok G. Diro
                                                                                    Aug. 14
                                                                                    Aug. 15
                                                                                              OIC-ACIR Jaime B. Santiago
                                                                                              Asst. Chief Ariel M. Calabia
                                                                                                                                      Aug. 31
                                                                                                                                      Aug. 31
triplicate copy from one set of unused        Chief Asuncion E. Bernades            Aug. 15   Asst. Chief Neil U. Cordero             Aug. 31
BIR Form No. 2320 – Tax Credit Certi-
ficate with Serial No. 012832
BIR searches for Exemplary Revenue Employee
                              displayed outstanding         the Revenue Regions and           ployee of the BIR for at least
   By Beverly Samia                                         Revenue District Offices
                              work performance and                                            seven (7) years at the time of
                              dedication to duty.           within Metro Manila,              nomination; must be rated
THE BIR, in partnership            The Search is open to    including the BIR National        Very Satisfactory under the
with the Tax Management       all BIR employees, exclu-     Office and the Large Tax-         PMS for the immediately pre-
Association of the Philip-    ding those who are holding    payers Service (excluding         ceding six consecutive per-
pines (TM-AP) launched        Division Chief/Revenue        LTDO-Cebu). Subsequently,         formance rating periods prior
last June 26 the Search for   District Officer positions    the Search shall cover the        to their nomination con-
Exemplary Revenue Emplo-      and above. However, in the    areas outside Metro Manila.       ducted during the last three
yee of 2008 to recognize      initial conduct of the             To qualify for the Search,   years; must not have been
BIR employees who have        Search, it shall cover only   the nominee must be an em-        charged under a criminal
                                                                                              information pending in court
                                                                                              or must not have any pen-
                                                                                              ding criminal and/or admi-
                                                                                              nistrative case/charge; and
                                                                                              must not have been adjudged
                                                                                              guilty/liable in any admi-
                                                                                              nistrative or criminal case.
                                                                                                   Based on the nomina-
                                                                                              tions received by the
                                                                                              Search Committee, sixteen
                                                                                              (16) revenuers were offi-
                                                                                              cially nominated to the

                                                                                                    BIR searches ... to p.2

                                                                                                     Rowena G. Altura
                                                                                                     Silverio C. Sante
                                                                                                     Managing Editor
                                                                                                     Eleonor F. Capili
                                                                                                        News Editor
                                                                                                  Mary Aileen F. Marquez
                                                                                                     Beverly C. Samia
                                                                                                  Brando Ador C. Bautista
                                                                                                       Layout Artists

                                                                                                    The BIR Monitor is the
                                                                                                   official newsletter of the
                                                                                                  Bureau of Internal Revenue
                                                                                                        published by the
                                                                                                  Corporate Communications
                                                                                                      Division, under the
                                                                                                   supervision of the Policy
                                                                                                    and Planning Service.

                                                                                                  Editorial Office: Room 903,
                                                                                                      BIR National Office,
                                                                                                    Agham Road, Diliman,
                                                                                                          Quezon City
                                                                                                     Tel/Fax No. 426-2190

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