NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
ficp of tfie 't'tciQ*
23 mar 30 P3 38
s.»o.sStt3^
RECEIVED BY;4
Introduced by Senator Raffy T. Tulfo
AN ACT
EXEMPTING MICROINSURANCE POLICIES FROM VALUE-ADDED TAX, TAX ON 
LIFE INSURANCE PREMIUMS AND DOCUMENTARY STAMP TAX, AMENDING 
FOR THIS PURPOSES SECTIONS 108,109,123,183,184,185,186, AND 187 OF 
THE "NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED
EXPLANATORY NOTE
The Medium-Term Philippine Development Plan formulated at the turn of this 
century (MTPDP 2001-2004) stressed the need to provide risk protection to the poor. This 
landmark document recognized that "protecting the poor and the vulnerable groups is 
Imperative in winning the battle against poverty" Among others, it called for the 
involvement of the private sector In providing access to insurance services to our 
impoverished population to protect them against losses arising from death, accident, 
sickness, injury, fire and other perils. Such tragedies and disasters can cause untold 
sufferings and serious financial dislocation to a household which can hardly provide food, 
clothing, shelter and medicine to Its family members. Many of our people who live in 
object poverty cannot afford the cost of social security programs which both the 
government and the private sector provide and the finite resources of our government 
does not allow it to extend adequate social protection to its needy population.


Under the new Insurance Code of 2013 (R.A.No. 10607), Microinsurance was 
incorporated and defined in the law. Sec. 187 thereof defines Microinsurance as a 
"financial product or service that meets the risk protection needs of the poor where: (a) 
the amount of contributions, premiums, fees or charges, computed on a daily basis, does 
not exceed 7.5% of the current daily minimum wage rate for non-agricultural workers in 
Metro Manila; and, (b) the maximum sum of guaranteed benefits is not more than 1,000 
times of the current minimum wage rate for non-agricultural workers in Metro Manila." 
Data show that only very few can avail of the maximum coverage and benefit and benefit 
allowed under the law. Given their meager income and irregular cash inflow, our low- 
salaried employees and informal workers still find Microinsurance expensive, if not 
unaffordable. One reason for this Is the taxes imposed on Microinsurance policies sold by 
life and non-life companies. Most onerous are the taxes levied on non-life Microinsurance 
products which are taxed between 25%-27.5% of the premium paid. A considerable 
amount of the premium paid by the hapless insured goals to tax instead of getting a more 
comprehensive coverage and benefits. The tax burden which is passed on the insuring 
public prevents the optimization of the potential of Microinsurance to uplift the plight of 
the less privileged in our country. Removing the taxes will definitely bring down the cost 
of insurance protection by way of lower premium or more meaningful coverage with the 
same amount of premium. Microinsurers can deliver better products which can meet the 
insurance needs of the underserved, if not the totally unserved, sector of our population.
Our government has limited resources to provide adequate social security 
protection to the masses. The recent Commission on Audit reports revealed that the 
government-sponsored "Pantawid Pamilyang Pilipino Program (4Ps) despite its colossal 
cost and many years of implementation has failed to lift 90% of Its participations from 
poverty. Private sector support In poverty reduction will boost the government efforts in 
improving the blighted lives of millions of Filipinos. Microinsurance Is a sustainable and 
affordable tool to help deliver our people from helplessness, mendicancy and scarcity.


For the foregoing reasons, urgent consideration and enactment of this bill is 
earnestly sought.
Raffy T. Tulfo 
■^Senatop


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NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
of tijf
)
j 23 mar 30 P3 38
S.B. No.
RECEIVED BY
Introduced by Senator Raffy T. Tulfo
AN ACT
EXEMPTING MICROINSURANCE POLICIES FROM VALUE-ADDED TAX, TAX 
ON LIFE INSURANCE PREMIUMS AND DOCUMENTARY STAMP TAX, 
AMENDING FOR THIS PURPOSES SECTIONS 
108,109,123,183,184,185,186, AND 187 OF THE "NATIONAL INTERNAL 
REVENUE CODE OF 1997, AS AMENDED
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
Section 1. Section 108 of the National Internal Revenue Code of 1997 (NIRC), 
as amended, is hereby further amended to read as follows:
"Sec. 108. Value-added Tax on Sale of Service and Use or Lease of Properties. -
"(A) Rate and Base of Tax.- There shall be levied, assessed and collected, a 
value-added tax equivalent to twelve percent (12%) of gross receipts derived from 
the sale or exchange of services, including the use or lease or properties.
"The phrase 'sale or exchange of services' means the performance of all kinds 
of services in the Philippines for others for a fee, remuneration or consideration, 
including those performed or rendered by construction and service contractors; stock, 
real estate, commercial, customs and immigration brokers; lessors of property, 
whether personal or real; warehousing services; lessors or distributors of


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cinematographic films; persons engaged in milling, processing, manufacturing or 
repacking goods for others; proprietors, operators or keepers of hotels, motels, rest 
houses, pension houses, inns, resorts; proprietors or operators of restaurants, 
refreshment parlors, cafes and other eating places, including clubs and caterers; 
dealers in securities; lending investors; transportation contractors on their transport 
of goods or cargoes, including persons who transport goods or cargoes for hire and 
other domestic common carriers by land relative to their transport of goods or cargoes; 
common carriers by air and sea relative to their transport of passengers, goods or 
cargoes from one place in the Philippines to another place in the Philippines; sales of 
electricity by generation companies, transmission by any entity, and distribution 
companies, including electric cooperatives; services of franchise grantees of electric 
utilities, telephone and telegraph, radio and television broadcasting and all other 
franchise grantees except those under Section 119 of this Code and non-life insurance 
companies (except their crop insurances AND MICROINSURANCES), including 
surety, fidelity, indemnity and bonding companies; and similar services regardless of 
whether or not the performance thereof calls for the exercise or use of the physical or 
mental faculties. The phrase ’sale or exchange of services' shall likewise
'x X X.
Sec. 2. Section 109 of the NIRC, as amended, is hereby further amended to 
read as follows:
"Sec. 109. Exempt Transactions. - (1) Subject to the provisions of 
Subsection (2) hereof, the following transactions shall be exempt from the value- 
added tax:
"(A) XXX
X xx;
"(AA) Sale of drugs and medicines prescribed for diabetes, high cholesterol, 
and hypertension beginning January 1, 2019; [an#]


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"(BB) Sale or lease of goods or properties or the performance of services other 
than the transactions mentioned in the preceding paragraphs, the gross annual sales 
and/or receipts do not exceed the amount of Three million pesos (P3,000/000) [r]
AND
"(CC) SALE OF MICROINSURANCE PRODUCTS OR SERVICES BY AN 
INSTITUTION, ORGANIZATION, COMPANY AND/OR ASSOCIATION DULY 
CERTIFIED BY THE INSURANCE COMMISSION."
Sec. 3. Section 123 of the NIRC, as amended, is hereby further amended to 
read as follows:
"Section 123. Taxon Life Insurance Premiums. - There shall be collected from 
every person, company or corporation (except purely cooperative companies or 
associations) doing life insurance business of any sort in the Philippines a tax of two 
percent (2% of the total premium collected (EXCEPT PREMIUMS ON 
MICROINSURANCE), whether such premiums are paid In money, notes, credits or 
any substitute for money; but premiums refunded within six (6) months after payment 
on account of rejection of risk or returned for other reason to a person Insured shall 
not be Included in the taxable receipts; nor shall any tax be paid upon reinsurance by 
a company that has already paid the tax; nor upon premiums collected or received by 
any branch of a domestic corporation, firm or association doing business outside the 
Philippines on account of any life insurance of the insured who is a nonresident, if any 
tax on such premium is imposed by the foreign country where the branch is 
established nor upon premiums collected or received on account of any reinsurance, 
if the insured, in case of personal Insurance, resides outside the Philippines, if any tax 
on such premiums is Imposed by the foreign country where the original insurance has 
been Issued or perfected; nor upon that portion of the premiums collected or received 
by the insurance companies on variable contracts. In excess of the amounts necessary, 
to insure the lives of the variable contract owners.


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"Cooperative companies or associations are such as are conducted by the 
members thereof with the money collected from among themselves and solely for 
their own protection and not for profit."
Sec. 4. Section 183 of the NIRC, as amended, is hereby further amended to 
read as follows:
"SEC. 183- Stamp Taxon Life Insurance Policies. - On all policies of insurance 
or other instruments by whatever name the same may be called, whereby any
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insurance shall be made or renewed upon any life or lives, EXCEPT ON
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MICROINSURANCE, there shall be collected a one-time documentary stamp tax at
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the following rates:
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If the amount of insurance does not
exceed P 100,000
Exempt
If the amount of Insurance exceeds P
100,000 does not exceed P 300,000
P 20.00
If the amount of insurance exceeds P
300,000 does not exceed P 500,000
P 50.00
If the amount of insurance exceeds P
500,00o but does not exceed P 750,000
P 100.00
If the amount of insurance exceeds P
750,000 but does not exceed P 1,000,000
P 150.00
If the amount of insurance exceeds P
1,000,000
P 200.00


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Sec. 5. Section 184 of the NIRC, as amended, is hereby further amended to 
read as follows:
"SEC. 184. Stamp Tax on Policies of Insurance Upon Property, - On all policies of 
insurance or other instruments by whatever name the same may be called, by which 
insurance shall be made or renewed upon property of any description, including rents 
or profits, against peril by sea or on inland waters, or by fire or lightning, EXCEPT 
ON MICROINSURANCE, there shall be collected a documentary stamp tax of Fifty 
centavos (P0.50) on each Four pesos (P4.00), or fractional part thereof, of the amount 
of premium charged: Provided, however. That no documentary stamp tax shall be 
collected on reinsurance contracts or on any instrument by which cession or 
acceptance of insurance risks under any reinsurance agreement is effected or 
recorded."
Sec. 6. Section 185 of the NIRC, as amended, is hereby further amended to 
read as follows:
"SEC. 185. Stamp Taxon Fidelity Bonds and Other Insurance Policies. On all policies 
of insurance or bonds or obligations of the nature of indemnity for loss, damage or 
liability made or renewed by any person, association, company or corporation 
transacting the business or accident, fidelity, employer's liability, plate, glass, steam, 
boiler, burglar, elevator, automatic sprinkler, or other branch of insurance (except Ife, 
marine. Inland, [a«4] fire insurance, AND MICROINSURANCE), and all bonds, 
undertakings, or recognizances, conditioned for the performance of the duties of any 
office or position, for the doing or not doing of anything therein specified, and on all 
obligations guaranteeing the validity or legality of any bond or other obligations issued 
by any province, city, municipality, or other public body or organization, and on all 
obligations guaranteeing the title to any real estate, or guaranteeing any mercantile 
credits, which may be made or renewed by any such person, company or corporation, 
there shall be collected a documentary stamp tax of Fifty centavos (P0.50) on each 
Four pesos (P4.00), or fractional part thereof, of the premium charged.


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Sec. 7. Section 186 of the NIRC, as amended, is hereby further amended to 
read as follows:
"SEC. 186. Stamp Taxon Policies of Annuities and Pre-Need Plans. - On all policies of 
annuities, or other instruments by whatever name the same may be called, whereby 
an annuity may be made, transferred or redeemed, EXCEPT ON 
MICROINSURANCE, there shall be collected a documentary stamp tax of One peso 
(PI.00) on each Two hundred pesos (P200), or fractional part thereof, of the premium 
or installment payment on contract price collected. On pre-need plans, the 
documentary stamp tax shall be Forty centavos (P0.40) on each Two hundred pesos 
(P200), or fractional part thereof, of the premium or contribution collected." 
read as follows:
Sec. 8. Section 187 of the NIRC, as amended, is hereby further amended to 
read as follows:
"SEC. 187. Stamp Tax on Indemnity Bonds. - On all bonds for indemnifying any 
person, firm or corporation who shall become bound or engaged as surety for the 
payment of any sum of money or for the due execution or performance of the duties 
of any office or position or to account for money received by virtue thereof, and on all 
other bonds of any description, except such as may be required in legal proceedings 
AND ON MICROINSURANCE, or are otherwise provided for herein, there shall be 
collected a documentary stamp tax of Thirty centavos (P0.30) on each Four pesos 
(P4.00), or fractional part thereof, of the premium charged."
Sec. 9. Implementing Rules and Regulations (IRR). - Within thirty (30) days 
from the effectivity of this Act, the Secretary of Finance, upon recommendation of the 
Commissioner of Internal Revenue, shall promulgate the necessary rules and 
regulations for its effective implementation.
Sec. 10. Separability Clause. - If any provision of this Act is held unconstitutional 
or invalid, all other provisions not affected thereby shall remain valid.


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Sec 11. Repealing Clause. - All laws, decrees, executive orders, issuances, rules 
and regulations or parts thereof which are contrary to and inconsistent with this Act 
are hereby repealed, amended or modified accordingly.
Sec. 12. Effectivity. - This Act shall take effect fifteen (15) days after its 
complete publication in the Official Gazette or In a newspaper of general circulation In 
the Philippines.
Approved,