ifeli Senate
NINETEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
'(©fficp of t!)e §’rrrptiirp
72 OCT 27 ?A'A9
SENATE
S. No. 1435
RECEIVED BV:
Introduced by SENATOR RAMON BONG REVILLA, JR.
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
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.
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 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 goes to tax instead of getting a more comprehensive coverage and 
benefits. The tax burden which is passed on to 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 participants 
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 
earnestly sought.
is
RAMO^ONG REVILLA, JR.


NINETEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
S. No.
SENATE
1435
Senate
o( tl)C g>tciftarp
•22 XT 27 P4S0
...
Introduced by SENATOR RAMON BONG REVILLA, JR.
AN ACT
EXEMPTING MICROINSURANCE POLICIES FROM VALUE-ADDED TAX, 
TAXON 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:
1 
Sec. 1. Section 108 of the National Internal Revenue Code of 1997 (NIRC), as
2 
amended, is hereby further amended to read as follows:
3 
"Sec. 108. Value-added Tax on Sale of Services and Use or Lease of
4 
Properties. —
5 
"(A) Rate and Base of Tax. - There shall be levied, assessed and
6 
collected, a value-added tax equivalent to twelve percent (12%) of gross
7 
receipts derived from the sale or exchange of services, including the use or
8 
lease of properties.
9 
"The phrase 'sale or exchange of services' means the performance of all
10 
kinds of services in the Philippines for others for a fee, remuneration or
11 
consideration, including those performed or rendered by construction and
12 
service contractors; stock, real estate, commercial, customs and immigration
13 
brokers; lessors of property, whether personal or real; warehousing services;
14 
lessors or distributors of cinematographic films; persons engaged in milling,
15 
processing, manufacturing or repacking 
goods 
for others; proprietors,
16 
operators or keepers of hotels, motels, rest houses, pension houses, inns.


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
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
I
thereof calls for the exercise or use of the physical or mental faculties. The 
phrase 'sale or exchange of services' shall likewise include:
"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 
"xxx;
"(AA) Sale of drugs and medicines prescribed for diabetes, high
I
cholesterol, and hypertension beginning January 1, 2019; [a«4}
"(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)H AND


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
n(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.
"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."


1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
Sec. 4. Section 183 of the NIRC, as amended, is hereby further amended to 
read as follows:
"SEC. 183. Stamp Tax on Life Insurance Policies. - On all policies of 
insurance or other instruments 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 amount 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 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."


1 
Sec. 6. Section 185 of the NIRC, as amended, is hereby further amended to
2 
read as foiiows:
3 
"SEC. 185. Stamp Tax on Fidelity Bonds and Other Insurance Policies. -
4 
On all policies of insurance or bonds or obligations of the nature of indemnity
5 
for loss, damage or liability made or renewed by any person, association,
6 
company or corporation transacting the business of accident, fideiity,
7 
employer's liability, piate, glass, steam, boiler, burglar, elevator, automatic
8 
sprinkler, or other branch of insurance (except life, marine, iniand, [afi4} fire
9 
insurance, AND MICROINSURANCE), and ali bonds, undertakings, or
10 
recognizances, conditioned for the performance of the duties of any office or
11 
position, for the doing or not doing of anything therein specified, and on all
12 
obligations guaranteeing the validity or legality of any bond or other obiigations
13 
issued by any province, city, municipality, or other public body or organization,
14 
and on all obligations guaranteeing the title to any real estate, or guaranteeing
15 
any mercantile credits, which may be made or renewed by any such person,
16 
company or corporation, there shall be collected a documentary stamp tax of
17 
Fifty centavos (P0.50) on each Four pesos (P4.00), or fractional part thereof,
18 
of the premium charged."
19
20 
Sec. 7. Section 186 of the NIRC, as amended, is hereby further amended to
21 
read as follows:
22 
"SEC. 186. Stamp Tax on Policies of Annuities and Pre-Need Plans. - On
23 
all policies of annuities, or other instruments by whatever name the same may
24 
be called, whereby an annuity may be made, transferred or redeemed,
25 
EXCEPT ON MICROINSURANCE, there shall be collected a documentary
26 
stamp tax of One peso (PI.00) on each Two hundred pesos (P200), or fractional
27 
part thereof, of the premium or installment payment on contract price collected.
28 
On pre-need plans, the documentary stamp tax shall be Forty centavos (P0.40)
29 
on each Two hundred pesos (P200), or fractional part thereof, of the premium
30 
or contribution collected."
31


1 
Sec. 8. Section 187 of the NIRC, as amended, is hereby further amended to
2 
read as follows:
3 
"SEC. 187. Stamp Tax on Indemnity Bonds. - On all bonds for
4 
indemnifying any person, firm or corporation who shall become bound or
5 
engaged as surety for the payment of any sum of money or for the due
6 
execution or performance of the duties of any office or position or to account
7 
for money received by virtue thereof, and on all other bonds of any description,
8 
except such as may be required in legal proceedings AND ON
9 
MICROINSURANCE, or are otherwise provided for herein, there shall be
10 
collected a documentary stamp tax of Thirty centavos (P0.30) on each Four
11 
pesos (P4.00), or fractional part thereof, of the premium charged."
12
13 
Sec. 9. Implementing Rules and Regulations (IRR). - Within thirty (30) days
14 
from the effectivity of this Act, the Secretary of Finance, upon recommendation of the
15 
Commissioner of Internal Revenue, shall promulgate the necessary rules and
16 
regulations for its effective implementation.
17 
Sec. 10. Separability Clause. -If any section or provision of this Act is held
18 
unconstitutional or invalid, other provisions hereof which are not affected thereby shall
19 
remain in full force and effect.
20 
Sec. 11. Repealing Clause. - All laws, decrees, executive orders, issuances,
21 
rules and regulations or parts thereof which are contrary to and inconsistent with this
22 
Act are hereby repealed, amended or modified accordingly.
23 
Sec. 12. Effectivity. - This Act shall take effect fifteen (15) days after its
24 
complete publication in the Official Gazette or in two (2) newspapers of general
25 
circulation in the Philippines.
Approved,