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CM 106.2 - PAYMENT OF TAXES ON MOTOR VEHICLE INSURANCE THROUGH THE AAB's RECEIVING OUTLET

The payment of the Value-Added Tax (VAT) and DST liability on motor vehicle insurance is made through the AAB’s receiving outlet. This is in accordance with a MOA between the BIR, the Land Transportation Office and the Insurance Commission which established a system that provides on-line verification of Certificate of Coverage (COC) for the insurance of motor vehicles and at the same time ensures the collection of taxes therefrom.[1]

CM 106.2.1         PAYMENT OF TAXES ON MOTOR VEHICLE INSURANCE THROUGH THE AAB’s RECEIVING OUTLET- REMITTANCE [Refer to FC 106.2.1]

Under this payment scheme, the AAB’s receiving outlet receives from the insurance companies information relative to the issuance of motor vehicle insurance policy such as premium paid, coverage of insurance, etc. The receiving outlet determines the VAT and DST liabilities of each insurance company and prepares the appropriate tax returns. The amount of tax payable is deducted from the cash account wallet of the insurance company maintained with the AAB receiving outlet, if funds are sufficient. A tax remittance report is generated by the receiving outlet and the details of the tax collections are sent to the AAB with instructions to debit the AAB receiving outlet’s deposit account maintained in the AAB. Remittance of the tax payments by the AAB to the BTr through the BSP shall follow the procedures as in the payment of the tax through AAB-OTC.

The Vehicle Owner shall:

  1. Apply for the Certificate of Coverage (COC) for third-party liability (TPL) insurance with an insurance company/agent;
  2. Pay the insurance premium, plus all the charges billed by the insurance company/agent; and
  3. Receive the insurance policy, the COC, and the official receipt issued by the insurance company/agent.

The Insurance Company/Agent shall:

  1. Issue insurance policy, COC and official receipt to the vehicle owner;
  2. Receive payment of insurance premium, and all billed charges from the vehicle owner;
  3. Encode and transmit the payment data to the COC Authentication Facility (COCAF) for authentication of insurance coverage by the COC Authentication Office;
  4. Check sufficiency of the balance of the Cash Card/Debit Wallet fund maintained with the AAB receiving outlet to cover the remittance of insurance premium to a designated bank, the VAT and DST to the BIR, etc. If the fund is no longer sufficient, make deposits to the AAB to replenish the fund wallet balance; and
  5. Receive from the AAB receiving outlet the copies of the VAT and DST returns prepared and filed by the said outlet.

The COC Authentication Office shall:

  1. Receive COC data from the insurance company; and
  2. Check/Authenticate the COC received from the insurance company.

The AAB Receiving Outlet shall:

  1. Receive from the insurance company all relevant information relative to the issuance of motor vehicle insurance policy such as premium paid, coverage of insurance, etc.;
  2. Compute the corresponding VAT and DST liabilities of each and every insurance company based on the data received from the COC Authentication Office;
  3. Prepare the appropriate tax returns (BIR Form No. 0605 for VAT and BIR Form No. 2000 for DST) per insurance company;
  4. Verify the sufficiency of funds in the insurance companies/agents’ account wallet;
  5. Deduct the computed VAT and DST due from the wallet of the insurance company/agent’ if the fund being maintained with the outlet is sufficient;
  6. Generate the corresponding tax collections reports;
  7. Send the tax collection files and instructions to the AAB to debit the deposit account being maintained by the Receiving Outlet with the said AAB;
  8. Forward to the designated AAB branch the original and duplicate copies of the tax returns prepared and filed for and in behalf of the insurance company; and
  9. Transmit to the insurance company the taxpayer’s copies of the duly filed VAT and DST tax returns.

The AAB shall:

  1. Receive the tax remittance report from the AAB receiving outlet and the instructions to debit the AAB receiving outlet’s deposit account being maintained with the AAB corresponding to the VAT and DST liabilities of the insurance companies;
  2. Debit the AAB receiving outlet’s deposit account corresponding to the tax payments received;
  3. Receive all the copies of the tax returns filed by the AAB outlet for and in behalf of the insurance company;
  4. Batch and transmit to the concerned RDOs the tax returns received from AAB receiving outlet, in accordance with the applicable policies and procedures for returns thru OTC transactions; and
  5. Remit to the BTr the payments received from the receiving outlet, in accordance with the procedures in the remittance collections through AAB-OTC [Refer to AAB/BSP/BTr portions in CM 101.1 Over-the-Counter (OTC) Acceptance of Tax Payment and Remittance].

The BIR-RAD shall record the collections through the AAB receiving outlet in the eNGAS likewise following the procedures indicated in the functions of RAD portion in CM 101.1 Over-the-Counter (OTC) Acceptance of Tax Payment and Remittance.

CM 106.2.2         PAYMENT OF TAXES ON MOTOR VEHICLE INSURANCE THROUGH THE AAB’s RECEIVING OUTLET- COLLECTION REPORTING [Refer to FC 106.2.2]

The reporting of collections made through this payment scheme starts with the generation of the tax returns by the AAB receiving outlet made available in the receiving outlet website. The AAB posts the payment data received from the receiving outlet in the LBDES for uploading in the CBR-ITS database. The collections through the receiving outlet are integrated into the consolidated monthly statistical reports of revenue collections.

The AAB’s Receiving Outlet shall:

  1. Generate the tax collection report of insurance companies; and
  2. Post all the transactions made by the insurance companies in the receiving outlet Website which can be viewed by the insurance companies and the BIR.

The AAB shall:

  1. Receive tax collection files and convert the tax collection files received which are acceptable to the BIR;
  2. Consolidate all the collection information transmitted by the AAB outlet with the LBDES data file; and
  3. Transmit LBDES data to the BIR, in accordance with the existing policies and procedures for OTC payments.

The RDC shall:

  1. Receive the payment information transmitted by the AAB and upload payment data to the CBR-ITS database; and
  2. Generate BIR Form No. 1209 and forward the same to the LTDPQAD/LTDO/RDO for validation not later than the 10th day of the following month.

The procedure on the preparation of the monthly collection report integrating the collections from this scheme is the same as the payment through AAB-OTC (Refer to CM 101.2 Payment through AAB for OTC Transactions- Collection Reporting).

 

[1] RMC No. 7-2010.