Life insurance companies in the Philippines are looking for a substantial increase in business if premium and documentary stamp tax abolitions are finally passed into law.
Life insurance premiums currently incur a 5% premium tax, in addition to documentary stamp tax equivalent to 0.25% of the premiums. The life insurance sector is hoping that the abolition of the two taxes on life insurance would reduce its cost and, therefore, increase the sales of insurance policies.
The President of the Philippine Life Insurance Association Inc. (PLIA), Victor Quisumbing, is reported as saying that those taxes are among the reasons why life insurance is not attractive to policyholders. He said that a version of a bill to scrap the taxes has been passed in the House of Representatives, while a similar version is being discussed in the Senate.
He also expressed the opinion that a reduction, rather than a zeroing, of the taxes could also be acceptable to the industry.
He said that, if the tax reductions came into effect by the end of this year, sales of life insurance policies in the Philippines could increase by between 20% and 30% in 2010. The country, he said, with only 13% of its population with life insurance, has a very low level of policy holders compared to many other countries in Southeast Asia.
The proposed tax reforms, he continued, could therefore be of great assistance in the effort to increase the number of life insurance policy holders in the country. It would also allow the insurance sector in the Philippines to compete with its more developed competitors in countries such as Thailand and Malaysia.
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