Based on RMC 30-2008, the tax implications of VUL as a financial product of a life insurance

company are as follows:

1. Premiums received on account of the life insurance solicited from the

policyholder, being the main business activity of the life insurance company is, in
addition to the income tax imposed under Title II of the Tax Code, as amended,
subject to the business tax/premium tax and DST;

Direct Writings/Premiums - Generally, for the premiums received by a life

insurance company in undertaking its insurance activities, the same are subject
to premium tax at the rate of five percent (5%) on its direct writings/premiums
pursuant to Section 123 of the Tax Code.

SEC.
"SEC.183. Stamp
183. StampTaxTax on Life Insurance
on Life Policies.
Insurance On
Policies. all policies
On all of policies of
insurance
insurance ororother
otherinstruments
instrumentsby by
whatever namename
whatever the same
the may
samebemay called,
be called,
whereby
whereby any
anyinsurance
insuranceshall
shallbebemade
madeororrenewed
renewed upon anyany
upon life life
or lives, therethere
or lives,
shall
shall be
becollected
collecteda adocumentary
documentarystamp
stamptaxtax
of Fifty centavos
of Fifty (P0.50)
centavos on each
(P0.50) on each
Two hundred pesos (P200), or fractional part thereof, of the amount
Two hundred pesos (P200), or fractional part thereof, of the amount of premium of
collected.collected.
premium

2. For the management fees earned by the life insurance company in managing the
investment portfolio of the VUL fund, such management fees , in addition to the
income tax imposed under Title II of the Tax Code, as amended, is subject to
VAT pursuant to Section 108 of the Tax Code, as amended, or to the percentage
tax imposed under Section 116 of the same Code, as the case may be;

Management Fees, Fees,Rental

Rental Income,
Income, or Other
or Other IncomeIncome from Unrelated
from Unrelated
Services -- Management
Managementfees, fees,rental
rentalincome,
income,ororanyanyother
other income
income earnedearnedby by
thethe
company from
life insurance company from services
services which
which can
can be
be pursued
pursuedindependently
independentlyof ofthe
the
insurance business
business activity,
activity, are
arethus
thusnot
notsubject
subjecttotothe
the5%
5%premium
premiumtax taximposed
imposed
Section 123
under Section 123 above
abovebut,
but,rather,
rather,the
thesame
sameare
aretreated
treatedasasincome
incomeforforservices
services
that are
aresubject
subjecttotothe
theimposition
imposition of VAT pursuant to Section 108
of VAT pursuant to Section 108 of the Tax of the Tax
Code, asas amended,
amended,orortotothethepercentage
percentage taxtax imposed
imposed under
under Section
Section 116116 of the
of the
same Tax Code, as the case may be.

3. For the gain realized by the policyholder from the redemption of his units of hares
in the VUL fund, the same must be declared and reported by the said policyholder
for income tax purposes.
As amended by RMC 59-2008, the certificates issued to the policyholder evidencing
his contribution to the VUL fund which partake the nature of deeds of trust shall not
be subject to the imposition of DST prescribed by Sec. 195 of the Tax Code, as
amended, considering that the premiums on variable contracts have already been
subjected to DST under Sec. 183.

Moreover, according to RMC 49-2008, re-issuance fees, reinstatement fees, renewal

fees as well as penalties paid to the life insurance company incidental
to or in connection with the insurance policy contracts issued are subject to the five
percent (5%) premium tax on the gross amount received on such fees and/or
penalties.