Tax on health card premiums decried

November 25, 2018
Sonny Angara

SENATE Committee on Ways and Means chairperson Senator Sonny Angara urged the Bureau of Internal Revenue (BIR) to withdraw its revenue memorandum circular which states that premiums on health cards shall be subject to tax.

Revenue Memorandum Circular (RMC) 50-2018 (A7) provides that premiums on health cards paid by the employer for all employees shall be included as part of bonuses and benefits which are subject to the P90,000 tax-exempt threshold.

In effect, the circular reverses previous BIR ruling that premiums on health cards shall be tax-free.

BIR stated that RMC 50-2018 sought to clarify the implementing rules of Republic Act 10963.

“Kahit isa-isahin natin ang mga pahina ng RA 10963, hindi po natin makikita doon na dapat buwisan ang mga HMO o health card benefits. Kaya’t nananawagan tayo sa BIR na klaruhin na agad ang isyu na ito at patuloy na ipatupad ang tax-free health benefits,” said Angara.

“Sa laki ng gastusin sa pagpapagamot at pagpapa-ospital, hindi makatao na bubuwisan pa ang mga benepisyo na nakatutulong nang malaki para pangalagaan ang kalu-sugan ng bawat pamilyang Pilipino,” added Angara, who is a known advocate of free check-up and laboratory test for all Filipinos.

Angara said that instead of clarifying the revenue regulations, the RMC 50-2018 “created a confusion” over the proper treatment of the premiums on health cards.

The senator said it is crucial for the bureau to clear up the regulation at once as employers are set to release the 13th month pay and Christmas bonuses of their employees in the coming weeks.

Beginning this year, pursuant to RA 10963, the 13th month pay and other benefits, including productivity incentives and Christmas bonuses, are exempted from tax if they do not exceed P90,000.

Angara is also responsible for the law that raised the tax exemption cap of 13th month pay and other benefits from P30,000 to P82,000 in 2015.

The lawmaker stressed that health premiums should not be included in the computation of taxable bonuses and benefits.

“Tinaasan nga natin ang tax-free bonus para buong-buo itong maiuwi sa pamilya. Huwag naman po sana dayain ito dahil umaasa na ang publiko na mas malaking bonus na ang kanilang makukuha,” Angara said.