Sun Life urges government to resolve tax issues

Canada-based insurance giant Sun Life Financial (Philippines) is urging the government to immediately resolve critical tax issues adversely affecting the insurance industry especially since the additional cost with the implementation next month of the expanded value added tax (EVAT) is likely to be passed on to customers.

Sun Life chairperson Esther Tan said the government has to give due attention to pressing issues of the insurance industry such as high premium taxes, increased documentary taxes and several other taxes being slapped on insurance companies and their clients.

"The insurance industry is saddled by high taxes which is one of the highest, if not the highest in the region. The EVAT will add another layer of cost for our products. It will surely have an impact on both our pricing and eventually on the price our customers will have to pay for our products," said Tan.

Currently, the government levies a five percent premium tax on all premium payments received by insurance companies. Documentary stamp taxes (DST) are also imposed on all policies issued at a rate of P0.50 per P200 of premium.

"There are some gaps between how the BIR interprets the law on documentary stamps and when the same law obviously means to us," Tan said, referring to a charging question on DST that will require insurance companies to pay higher taxes in subsequent years.

Insurance companies have been complaining about the numerous exorbitant taxes that they have to pay. Considered as taxes on savings, these payables are seen mostly as a disincentive to the further mobilization of long-term savings of the insuring public. These taxes are also paid on top of various other taxes such as investment income taxes, local government unit taxes, corporate income taxes, among others.

Tan said the government, alongside plans to integrate the regulation of the insurance and pre-need businesses under the Insurance Commission, should initiate parallel moves to resolve the tax issues that undermine the insurance industry.

Sun Life is a member of the Sun Life Financial Group of companies, a leading international financial services organization providing a wide range of wealth accumulation and protection products services to individuals and corporate customers.