BIR cancels order taxing employees’ health card premiums

The Bureau of Internal Revenue (BIR) has “deleted” the provision imposing tax on health premiums paid by employers for their employees’ health cards.

The BIR issued the order after reviewing Revenue Memorandum Circular (RMC) 50-2018, which states that health card premiums are included in the computation of the P90,000 tax-free privilege on employee benefits and bonuses.

Issuing RMC No. 96-2018 on Monday, BIR Commissioner Cesar Dulay said “the implementation of the pertinent provisions under RMC No. 50-2018 relative to the group health insurance premiums and director’s fees, which were not affected by the provisions of the TRAIN Law, are hereby deleted from RMC 50-2018.”

The BIR issued the order after Senator Sonny Angara, chair of the Senate committee on ways and means, insisted that the circular had no basis as it was not provided for under Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law.

The senator also said that only Congress, and not the BIR, had the power to impose tax.

RMC 50-2018 was issued last May 11 to clarify certain provisions of Revenue Regulations 8-2018 and 11-2018, which were issued to implement the TRAIN law’s income tax provisions.

Item No. 7 of the RMC provides that “premium on health card paid by the employer for all employees, whether rank and file or managerial/supervisory, under a group insurance shall be included as part of other benefits of these employees which are subject to the P90,000 threshold.”