I.          Objectives

This order is issued to:

A.    Simplify and strengthen the monitoring of tax payments due from insurance companies; and,

B.    Set policies and establish procedures for processing and monitoring of tax payments from insurance companies.

II.         Policies

A.    The Insurance Commission (IC) shall choose a single bank where the insurance companies shall file and pay their Premium Tax, Value Added Tax (VAT), Documentary Stamp Tax (DST), Withholding Tax and Income Tax as per the Memorandum of Agreement between IC and the Bureau of Internal Revenue (BIR). IC has chosen the Land Bank of the Philippines (LBP), U.N. Branch for this purpose.

B.    Insurance companies, as large taxpayers, shall no longer pay directly with the Large Taxpayers' Division at the National Office.

C.   Limited Bank Data Entry System (LBDES) shall be used by the IC chosen bank as data entry system in processing payments from insurance companies.

D.   Payment data from IC chosen bank shall be transmitted to the Information Systems Operation Service (ISOS) Data Center through Electronic Data Transfer (EDT).

E.    The IC chosen bank and the insurance companies through the IC shall provide the information requirements of the BIR.

F.    The RDO having jurisdiction over an insurance company can have access to its data thru the respective Revenue Data Center.

III.        Procedures

A.        The insurance companies shall:

1.       File and pay their Premium Tax, VAT, DST, Withholding Tax and Income Tax to the IC chosen bank;

2.       Attach a hard and soft copy of the summary of tax liabilities for each of their branches as shown in Annex A^* to their corresponding tax return;

3.       File a Registration Update Form for branches registered at an RDO other than where their Head Office (HO) is located to delist tax types no longer to be paid at said RDO as a result of this RMO;

4.       Submit to IC their Annual Statement and additional monthly and quarterly reports as will be prescribed by IC in hard copies, diskette or other electronic media; and,

5.       Submit to IC a clear photocopy of the Official Receipt (OR) issued by IC chosen bank for tax payments.

B.        The IC chosen bank shall:

1.       Receive tax payments/returns with the necessary attachments from insurance companies;

2.       Issue OR to insurance companies for tax payments in addition to the validation of the tax returns;

3.       Transmit hard copies of Premium, VAT, Withholding Tax and Income Tax returns to IC on the fifth (5th) day following the last day of filing of said returns;

4.       Transmit hard copies of DST returns to IC on the fifteenth (15th) day following the month of transactions; and,

5.       Transmit payment data to ISOS Data Center through EDT.

C.        The Insurance Commission shall:

1.       Receive soft and hard copies of Annual Statement, additional monthly and quarterly reports as will be prescribed by IC;

2.       Receive clear photocopies of the OR for tax payments from insurance companies;

3.       Receive hard copies of Premium, VAT, DST, Withholding Tax and Income Tax returns as well as the attachments for the summary of tax liabilities for each of the branches of the insurance companies from IC chosen bank;

4.       Verify OR with the hard copies of the tax return;

5.       Submit the following reports in diskettes or other electronic media as well as the hard copies which were received from insurance companies to the BIR Collection Service thru the Large Taxpayers Division (LTD):

a.         Annual Statement of insurance companies;

b.         Monthly report of insurance companies containing the following information:

i.          Premium Tax - Quarterly:

a)         Gross premiums (net of returns and cancellation) on direct business of health and accident issued by non-life insurance companies;

b)         Premium income (net of ceded business) in the case of life insurance;

ii.          Value-Added Tax - Monthly/Quarterly:

a)         Gross receipts or collections of premiums except premium on health and accident by non-life insurance companies as basis for output tax;

b)         Summary of input taxes incurred by non-life insurance companies;

iii.         Documentary Stamp Tax - Monthly:

a)         Gross premiums (net of returns and cancellation) received for the month by non-life insurance companies in all line of business;

b)         Total sum insured of all policies issued by all life insurance companies for the month;

6.       Compile the annual, quarterly and monthly reports of insurance companies on the 10th day after the date of receipt of said reports for pick-up by the LTD; and,

7.       Compile hard copies of tax returns on the fifth (5th) day following the last day these returns were transmitted to them by IC chosen bank for pick-up by LTD.

D.        The Information Systems Operation Service (ISOS) Data Center shall:

1.       Receive payment data from IC chosen bank thru EDT;

2.       Process payment data submitted by IC chosen bank;

3.       Generate LBDES reports and submit to CS;

4.       Receive copies of tax returns from CS;

5.       Process tax returns under Returns Processing System (RPS) in the Integrated Tax System (ITS);

6.       Generate RPS reports and submit to CS;

7.       Transfer data to the RDC having jurisdiction over the Revenue District Office (RDO) where insurance company is a registered taxpayer, if RDO concerned is computerized;  

8.       Transmit hard copy of RPS data to the RDO where insurance company is a registered taxpayer, if RDO concerned is non-computerized; and,

9.       Store copies of returns for safekeeping.

E.        The Information Systems Development Service (ISDS) shall:

1.    Provide Collection Service with the Excel template for the data capture of needed information from the tax returns;

2.    Assist in the maintenance and enhancement of the needed program.

F.         The BIR Collection Service (CS) thru the Large Taxpayers Division (LTD) shall:

1.       Collect hard copies of Premium Tax, VAT, DST, Withholding Tax and Income Tax returns as well as the attachments for the summary of tax liabilities for each of the branches of the insurance companies from IC;

2.       Collect hard copies as well as diskettes or other electronic media of the Annual Statement, monthly and quarterly reports of insurance companies from IC;

3.       Receive LBDES reports from ISOS Data Center;

4.       Furnish a copy of LBDES Report to the non-computerized RDO having jurisdiction over the insurance company HO for inclusion of the pertinent collection data in their 12.09 report and reconciliation;

5.       Capture information from tax returns based on Annex B^* ;

6.       Transmit copies of tax returns to ISOS Data Center for ITS processing;

7.       Analyze and match reports submitted to them by IC and ISOS Data Center with Collection Service data;

8.       Monitor compliance of Insurance Companies in paying premium taxes, VAT, documentary stamp taxes, withholding taxes and income taxes; and,

9.       Submit performance and compliance reports to the Deputy Commissioner (DCIR), Operations Group.

G.        The DCIR, Operations Group shall:

1.       Evaluate reports submitted by the Collection Service.

2.       Initiate appropriate action based on findings from the reports.

3.       Submit regular reports to the Commissioner.

V.        Repealing Clause

All other issuances and/or portions thereof inconsistent herewith are hereby repealed and amended accordingly.

VI.       Effectivity

This Order takes effect immediately.

Adopted: 20 Aug. 1998

(SGD.) BEETHOVEN L. RUALO
Commissioner of Internal Revenue

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^* Text Available at Office of the National Administrative Register, U.P. Law Complex, Diliman, Quezon City.