Insurance Company seeks refund of taxes

CEBU, Philippines - Insurance company AXA Life is asking the court to order the city government to refund the firm of “erroneously paid” taxes amounting to over P4.2 million, which it paid last 2008.

In the case it filed in court, AXA Life said City Treasurer Ofelia Oliva allegedly erroneously collected from the firm P4,271,645.21 last January 22, 2008, representing local business tax.

The firm actually paid P4,502,611 for its local business tax for 2008, but is only claiming a refund of P4,271,645.21 after deducting its pending tax due of P230,966.73.

Last October 30, AXA filed a written claim for refund of the said amount, but up to date, no decision has reportedly been made regarding the administrative claim.

AXA received P904,793,173.08 as payments for life insurance policies, the same amount that the firm declared as its gross receipts for 2007. It also included payments under variable life insurance contracts in the total amount of P864,544,075.07 in the gross receipts.

AXA subsequently paid P4,502,611 as business tax based on the gross receipts for 2007.

Under the Department of Finance Local Finance Cicrcular, the portion of insurance premiums actually collected pertaining to variable contracts and excess of the amounts necessary to insure the lives of variable contracts are excluded from the taxable gross receipts.

AXA said it has complied with all the statutory requirements for the refund of tax erroneously paid, thus, the request for a refund.

The insurance premiums collected by insurance companies constitute their gross receipts, however, in so far as variable contracts is concerned, the portions of the premiums collected pertaining to variable contracts and the excess of the amounts necessary to insure the lives of the variable contracts should be included.

AXA admitted it committed an error in including its gross receipts certain portions of the premiums excluded from business tax by the DOF circular.

Under the Local Government Code, a taxpayer has two years from the date of payment of tax within which to file a case before the court for the refund or credit of erroneously paid local tax. — Jasmin U. Labaco/JMO (THE FREEMAN)