In fact, ISAP president Victoria Roman Flores had made it clear that "the meetings was held in the spirit of cooperation" with the end in view of making the local industry viable and competitive in the face of increasing investments by foreign non-life insurers.
In a press statement, Flores said that the country’s non-life insurance industry is heavily taxed or accounting for almost 25 percent of the cost of a non-life insurance product like fire insurance.
"Nonetheless, ISAP opted not to seek tax reforms due to government’s present huge deficit," Flores said. The Philippines expects to see record levels in the 2002 fiscal deficit as it had already breached the P200-billion level at the start of the last quarter.
Actually the non-life insurance organization had presented a study outlining the insurance lines where local companies are losing to foreign insurers due to tax disadvantages.
The study, among others issued, a request for some kind of account adjustment on the classification of accounts geared for non-life insurance in order to compute the minimum corporate income tax (MCIT) draft factoring in the nature and peculiarities of the industry. The existing draft uses terms generally associated with life insurance not non-life insurance activities.
It also presented a request that the documentary stamp tax (DST) base be net premium or gross premiums net of returns since it presently includes unconsumated insurance contracts.
ISAP also sought a time extension to imprint DST from five to 90 days after the end of the each month.
"The non-life insurance industry uses intermediaries to sell their products," the study explained. "They are given credit terms of 60 to 90 days to report on policies issued and premiums paid. Therefore, a time lapse approximating the time the insurers gets production reports from the intermediaries."
Flores also noted that Revenue Regulation (RR) 8-2002 and 14-2002, imposes value-added tax (VAT) on services not reinsurance premiums. Neither does it specify what these services are thus leading to possible arbitrary interpretation.