Special Deductions - 97 Format for Presentation Only

7/31/2019 Special Deductions - 97 Format for Presentation Only

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Ronell B. Alcachupas


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What is Special Deductions?

Deductions other than those specifically laid on

the tax code which may only be availed by certain orlimited entities under a specific condition.


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Who are entitled to avail special

deductions?

Insurance Companies

Mutual Insurance Companies Mutual Marine Insurance Companies

Assessment Insurance Companies

Estates and Trusts; and

Private Educational Institutions


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Insurance CompaniesInsurance companies, whether domestic or foreign doing

business in the Philippines, are allowed to deduct in addition to theitemized deductions under the tax code, the following:

(1) The net additions, if any, required by law to be made withinthe year to reserve funds;

(2) The sums other than dividends paid within the year on policy

and annuity contracts may be deducted from their gross income:Provided, however, That the released reserve be treated as income forthe year of release.


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Mutual Insurance CompaniesIn the case of mutual fire and mutual employers'

liability and mutual workmen's compensation and mutualcasualty insurance companies requiring their members to

make premium deposits to provide for losses and expenses,said companies shall not return as income any portion ofthe premium deposits returned to their policyholders, butshall return as taxable income all income received by them

from all other sources plus such portion of the premiumdeposits as are retained by the companies for purposesother than the payment of losses and expenses andreinsurance reserves.


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Mutual Marine Insurance

CompaniesMutual marine insurance companies shall include in their

return of gross income, gross premiums collected and received

by them less amounts paid to policyholders on account ofpremiums previously paid by them and interest paid upon thoseamounts between the ascertainment and payment thereof. Theyare entitled to deduct the following from their gross income:

Amounts repaid to policyholders on account of premiumspreviously paid by them.

Interest paid upon those amounts between the ascertainment dateand the date of its payment.


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Assessment Insurance CompaniesAssessment insurance companies, whether domestic

or foreign, may deduct from their gross income the actualdeposit of sums with the officers of the Government of thePhilippines pursuant to law, as additions to guarantee orreserve funds.


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Estates and TrustsMay avail special deductions from gross income

any amount of income paid, credited, or to bedistributed to the beneficiaries but this income shallbe taxable to the beneficiaries.


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Special Deductions - 97 Format for Presentation Only

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