NINETEENTH CONGRESS OF THE ) 
REPUBOC OF THE PHILIPPINES 
)
First Regular Session 
)
SENATE
s. No. 2131
llil Senate
of tl)if iSca etflQJ
23 MAY -4 P6:32
RtCEiVEO BV;
Introduced by Senator Loren B. Legarda
AN ACT
EXEMPTING MICROINSURANCE POLICIES FROM VALUE-ADDED TAX, 
TAX ON LIFE INSURANCE PREMIUMS AND DOCUMENTARY STAMP TAX, 
AMENDING FOR THIS PURPOSE SECTIONS 108,109,123,183,184,185,186, 
AND 187 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997,
AS AMENDED
EXPLANATORY NOTE
Section 187 of Republic Act No. 10607 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 seven and a half percent (7.5%) of the 
ciurent daily minimum wage rate for nonagricultural workers in Metro 
Manila; and
(b) The maximum sum of guaranteed benefits is not more than one 
thousand (1,000) times of the current daily minimum wage rate for 
nonagricultural workers in Metro Manila.
As stated by the Insurance Commission, microinsurance was established to 
cater to the low-income sector. This serves as a relief against covered distress, 
misfortune or contingent events that may affect an individual, such as: (i) death; (ii) 
accident and iUness; (iii) fire and other extended perils; (iv) 
calamities/disasters/catastrophic events; (v) casualty; and (vi) other contingent 
events. Further, with microinsurance, individuals who are earning below the 
minimum wage are given an opportimity to be insured and be protected against the 
above-mentioned risks.


Under the Philippine Development Plan (2023-2028), one of the strategies in 
promoting an inclusive, innovative, and healthy financial sector is to encourage 
efficiency and innovation in the microinsurance industry. For the third quarter of 
2022, the Insurance Commission reported an increase of 38.86% in the number of lives 
insured by microinsurance compared with that of the same period in year 2021. 
Specifically, the total number of lives insured for the third quarter of 2022 is at 54.99 
million with a total insurance premium contribution of Php8.5 billion.
To further support the microinsurance industry, this bill seeks to exempt 
microinsurance from the coverage of the value-added tax, tax on life insurance 
premiums, and doounentary stamp tax. Exempting microinsurance from taxes will 
directly benefit Fihpinos as this will bring down the cost of microinsurance making 
the industry more attractive and more accessible to FiUpmos.
In view of the foregoing, approval of this measure is earnestly sought.
-^EdRBNXiSARDA


NINETEENTH CONGRESS OF THE ) 
REPUBUC OF THE PHILIPPINES 
)
First Regular Session 
)
S. No.
SENATE
2131
23 MAY-4 P6 :32
RECEIVED BV;
Introduced by Senator Loren B. Legarda
AN ACT
EXEMPTING MICROINSURANCE POLICIES FROM VALUE-ADDED TAX, 
TAX ON LIFE INSURANCE PREMIUMS AND DOCUMENTARY STAMP TAX, 
AMENDING FOR THIS PURPOSE 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:
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Section 1. Section 108 of the National Internal Revenue Code of 1997 (NIRC), as
2 
amended, is hereby further amended to read as follows:
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"Sec. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. -
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"(A) Rate and Base of Tax. - There shaU be levied, assessed and collected, a value-
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added tax equivalent to twelve percent (12%) of gross receipts derived from the
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sale or exchange of services, including the use or lease of properties.
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"The phrase "sale or exchange of services7 means the performance of all
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kinds of services in the Philippines for others for a fee, remuneration or
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consideration, including those performed or rendered by construction and
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service contractors; stock, real estate, commercial, customs and immigration
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brokers; lessors of property, whether personal or real; warehousing services;
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lessors or distributors of cinematographic films; persons engaged in milling,
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processing, manufacturing or repacking goods for others; proprietors,
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operators or keepers of hotels, motels, resthouses, pension houses, inns, resorts;
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proprietors or operators of restaurants, refreshment parlors, cafes and other


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eating places, including clubs and caterers; dealers in securities; lending
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investors; transportation contractors on their transport of goods or cargoes,
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including persons who transport goods or cargoes for hire and other domestic
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common carriers by land relative to their transport of goods or cargoes;
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common carriers by air and sea relative to their transport of passengers, goods
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or cargoes from one place in the Philippines to another place in the Phihppines;
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sales of electricity by generation companies, transmission by any entity, and
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distribution companies, including electric cooperatives; services of franchise
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grantees of electric utilities, telephone and telegraph, radio and television
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broadcasting and all other franchise grantees except those under Section 119 of
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this Code and non-life insurance companies (except their crop insurances AND
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MICROINSURANCES) including surety, fidehty, indemnity and bonding
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companies; and similar services regardless of whether or not the performance
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thereof calls for the exercise or use of the physical or mental faculties. The
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phrase 'sale or exchange of services' shall likewise include:
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"xxx."
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Sec. 2. Section 109 of the NIRC, as amended, is hereby further amended to read
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as follows:
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"Sec. 109. Exempt Transactions. - (1) Subject to the provisions of
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Subsection (2) hereof, the following transactions shall be exempt from the
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value-added tax:
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"(A) XXX
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"xxx;
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"(AA) Sale of drugs and medicines prescribed for diabetes and
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medicines for: xxx
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"(BB) Sale or importation of the following beginning January 1, 2021 to
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December 31,202: xxx
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" (CC) Sale or lease of goods or properties or the performance of services
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other than the transactions mentioned in the preceding paragraphs, the gross
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annual sales and/or receipts do not exceed the amount of Three million pesos
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(P3,000,000)[i} AND


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"(DD) SALE OF MICROINSURANCE PRODUCTS OR SERVICES
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BY AN INSTITUTION, ORGANIZATION, 
COMPANY AND/OR
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ASSOCIATION DULY 
CERTIFIED BY 
THE INSURANCE
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COMMISSION."
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Sec. 3. Section 123 of the NIRC, as amended, is hereby further amended to read
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as follows:
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"Section 123. Tax on Life Insurance Premiums. - There shall be collected
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from every person, company or corporation (except purely cooperative
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companies or associations) doing life insurance business of any sort in the
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Philippines a tax of two percent (2%) of the total premium collected (EXCEPT
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PREMIUMS ON MICROINSURANCE), whether such premiums are paid in
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money, notes, credits or any substitute for money; but premiums refunded
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within six (6) months after payment on account of rejection of risk or returned
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for other reason to a person insured shah not be included in the taxable receipts;
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nor shall any tax be paid upon reinsurance by a company that has already paid
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the tax; nor upon premiums collected or received by any branch of a domestic
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corporation, firm or association doing business outside the PhiHppines on
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accoimt of any hfe insurance of the insured who is a nonresident, if any tax on
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such premiimi is imposed by the foreign country where the branch is
20 
established nor upon premiums collected or received on account of any
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reinsurance, if the insured, in case of personal insurance, resides outside the
22 
Philippines, if any tax on such premiums is imposed by the foreign country
23 
where the original insurance has been issued or perfected; nor upon that
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portion of the premiums collected or received by the insurance companies on
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variable contracts, in excess of the amounts necessary, to insure the Hves of the
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variable contract owners.
27 
"Cooperative companies or associations are such as are conducted by
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the members thereof with the money collected from among themselves and
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solely for their own protection and not for profit."
30 
Sec. 4. Section 183 of the NIRC, as amended, is hereby further amended to read
31 
as follows:


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"SEC. 183. Stamp Tax on Life Insurance Policies. - On all policies of 
insurance or other instnunents by whatever name the same may be called, 
whereby any insurance shall be made or renewed upon any life or lives, 
EXCEPT ON MICROINSURANCE, there shall be collected a one-time 
documentary stamp tax at the following rates:
If the amount of insurance does not exceed P100,000
Exempt
If the amount of insurance exceeds P100,000 but does not
exceed P300,000
P20.00
If the amount of insurance exceeds P300,000 but does not
exceed P500,000
P50.00
If the amount of insurance exceeds P500,000 but does not
exceed P750,000
PIOO.OO
If the amount of insurance exceeds P750,000 but does not
exceed P1,000,000
P150.00
If the amoxmt of insurance exceeds P1,000,000
P200.00
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 hghtning, EXCEPT ON MICROINSURANCE, there shaU 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:


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as
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"SEC 185. Stamp Tax on 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 of accident, fidelity, employer's 
liability, plate, glass, steam, boiler, burglar, elevator, automatic sprinkler, or 
other branch of insurance (except life, marine, inland, [and} fire insurance, 
AND MICROINSURANCE), and aU 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 obtigations 
guaranteeing the vahdity or legality of any bond or other obligations issued by 
any province, city, municipality, or other pubHc body or organization, and on 
aU obtigations guaranteeing the titie 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."
Sec. 7. Section 186 of the NIRC, as amended, is hereby further amended to read 
follows:
"SEC. 186. Stamp Tax on 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 himdred pesos (P200), or fractional part thereof, of the premium or 
contribution collected."
Sec. 8. Section 187 of the NIRC, as amended, is hereby further amended to read 
follows:
"SEC. 187. Stamp Tax on Indemnity Bonds. - On aU 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


1 
of the duties of any office or position or to account for money received by virtue
2 
thereof, and on all other bonds of any description, except such as may be
3 
required in legal proceedings AND ON MICROINSURANCE, or are
4 
otherwise provided for herein, there shall be collected a documentary stamp
5 
tax of Thirty centavos (P0.30) on each Four pesos (P4.00), or fractional part
6 
thereof, of the premium charged/'
7 
Sec. 9. Implementing Rules and Regulations (IRR). - Within thirty (30) days from
8 
the effectivity of this Act, the Secretary of Finance, upon recommendation of the
9 
Commissioner of Internal Revenue, shall promulgate the necessary rules and
10 
regulations for its effective implementation.
11 
Sec. 10. Separability Clause. - If any provision of this Act is held unconstitutional
12 
or invalid, all other provisions not affected thereby shall remain vahd.
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Sec. 11. Repealing Clause. - All laws, decrees, executive orders, issuances, rules
14 
and regulations or parts thereof which are contrary to and inconsistent with this Act
15 
are hereby repealed, amended or modified accordingly.
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Sec. 12. Effectivity. - This Act shall take effect fifteen (15) days after its complete
17 
pubhcation in the Official Gazette or in a newspaper of general circulation in the
18 
Philippines.
Approved,