Insurance Premium Tax changes highlighted by TMF Group

There have been a number of changes to Insurance Premium Tax (IPT) and other insurance-related charges including VAT, according to TMF Group.

Austria
The Austrian parliament has introduced changes to the IPT regime. With effect from 1 October 2020, insurance premiums covering cars that are registered for the first time after 30 September 2020 will be subject to motor vehicle insurance tax (MVIT). This is calculated not only on the basis of the engine power in kW but also based on the CO2 emissions in grams per kilometre. The MVIT calculation on premiums covering motorcycles registered after 30 September 2020 will be based on the cubic capacity of their engine and the CO2 emissions.

TMF Group said this change does not impact the calculation of MVIT on insurance premiums related to motor vehicles registered before 1 October 2020 or those imported and registered in Austria for the first time, and the calculation shall be carried out in the current way without considering the CO2 emissions. TMF Group noted that the MVIT calculation can be complex and requires the insurer to observe a number of factors such as vehicle type and engine power.

Italy
The annual Italian IPT return is normally due by 31 May. However, the Italian tax authority has published circular letter 11/2020, which clarifies that the deadline for submission of the 2019 return has been postponed to 30 June 2020. This applies to both Italian and freedom-of-services insurers.

Saudi Arabia
As part of a range of measures to support the economy during the Covid-19 crisis, the Saudi Arabian finance minister has announced that VAT, which applies to most non-life insurance, is set to increase from 5% to 15% on 1 July 2020.

Jamaica
In Jamaica, the standard rate of general consumption tax, levied on most non-life insurance contracts in Jamaica, has been reduced to 15% from the previous rate of 16.5%, from 1 April 2020.

Manitoba, Canada
As part of its Covid-19 relief plan, Manitoba province in Canada has passed Bill 62, which introduces a new provincial sales tax (PST) exemption. PST in Manitoba applies to most insurance, with some specific exemptions for marine, aviation and transport, as well as certain life and health insurance. The recent bill will extend the exemption to insurance contracts covering residential and business properties located in Manitoba. The exemption will also apply to mortgage and title insurance and will apply to contracts entered into or renewed on or after 1 July 2020.