Tax and regulatory news

IPT update from TMF Group TMF Group's latest IPT Update notes the following changes: Denmark: The Environmental Protection Levy parafiscal charge on some motor insurance policies will increase from April 1, 2014; Ghana: The imposition of VAT on insurance premiums was delayed until April 1, 2014; Italy: Changes to motor IPT rates have been published; New Zealand: Non-resident insurers providing cover in New Zealand will be able to GST register to reclaim VAT on local costs; United Kingdom: Flood Re levy is likely to be introduced from mid-2015 on property and fire risks following agreement between Government and insurers; USA: Court ruling holds that cascading federal excise tax is not applicable on certain contracts between foreign reinsurers. hideMarsh's Regulatory and Premium Tax Update Marsh's latest Global Insurance Regulatory and Premium Tax Update, produced by Praveen Sharma, global leader of Marsh's insurance regulatory and tax consulting practice. Chile: With effect from December 1, 2013, General Regulation (Norma de Caracter General ) No 349 requires that all policies must be registered with the Superintendency of Securities and Insurance (Superintendencia de Valores y Seguros–SVS) and may be used by companies six days following their registration. The policy must be drafted in clear, comprehensible language. In the event of doubt over interpretation, that which is most favourable to the insured will apply. Marine and aviation hull policies are not required to be registered. All policies must be signed by both the insurer and the insured and, if the policy is issued in any other language, there must be a translation in Spanish, also signed by both parties. Ecuador: With effect from January 1, 2015, the rural social security levy on insurance premiums will be 0.5% payable by all insureds. The additional levy of 1.52%, which has been charged since January 1, 2012 to insureds who had not paid the rural social security levy during the period of November 2001 when the levy was introduced, to February 2007 when the regulations were published, will cease to be charged as of the end of 2014. France: According to EU Directive 2011/61/EU, Alternative Investment Fund managers must be appropriately insured for their professional liability, or must have additional own funds to cover this risk. The EU Directive was enacted into French law by Decree No 2013-687, which was published on July 30, 2013. Greece: With effect from January 1, 2014, the new legislation, issued by the supervisory body Bank of Greece, requires all premiums to be paid before the issuance of the policy or the effective date of the policy. All premiums collected by intermediaries must be remitted to the insurers within seven days. Malaysia: With effect from April 1, 2015, 6% goods and services tax will apply on insurance and reinsurance premiums paid to local insurers and reinsurers. Mexico: The Mexican senate increased the value-added tax (VAT/IVA) rate from 11% to 16%, with effect from January 1, 2014, for transactions in Baja California Norte, Baja California Sur and Quintana Roo, or within 12.5 miles (20 km) of any land border. However, insurance policies renewing in December 2013 will be subject to 11% VAT/IVA, provided that the premiums are paid before October 1, 2014. Czech Republic: Act No 160/2013 Coll. on Prevention Fund Contributions requires insurers to pay a prevention fund contribution of 3% of their motor third party liability premiums to the state loss prevention fund with effect from January 1, 2014. Nigeria: In order to reduce the turnaround time and to ensure effective monitoring of the processes for issuance of approval in principle, letter of attestation and certificate for offshore reinsurance for all classes of risk placement, the National Insurance Commission has reviewed/harmonised the requirements for requests for approval for foreign placement effective January 1, 2014. Puerto Rico: The Circular Letter CC-2013-1837-EX issued by the Insurance Commissioner's Office on August 28, 2013, introduced a surcharge of 0.9% charged on non-life classes of risk, which will be collected from new policy premiums and additional premiums as of October 1, 2013, and renewals from November 1, 2013. Uganda: The Stamps (Amendment of Schedule) Instrument, 2013 increased the stamp duty payable in respect of the non-life insurance classes (including health insurance) from UGX5,000 ($2) to UGX35,000 ($14), with effect from July 1, 2013. Change in prepayment offsetting highlighted by Fiscal Reps Fiscal Reps has warned that in Italy, following the provinces collecting their own insurance premium tax (IPT) for third party motor liability and the Italian tax return changes in April last year, it is not possible to use prepayment for offsetting against third party motor liability from January 2014 onwards (prepayment made in May 2013). As a reminder, said Fiscal Reps, the prepayment required to be paid by May 16, 2014 (to be used from January 2015 tax return submission) will be calculated as follows: 40% on 2013 tax base, tax base defined as total tax due + anti-racket contribution - motor liability tax due. As in previous years, the anti-racket contribution cannot be offset with the prepayment. Fiscal Reps has also reminded companies in Italy that Contracts and Premium Reports and Claims Reports for 2013 are due by April 30, 2014, and the reports must be submitted via bespoke software to the Italian Tax Office. Motor Reporting for 2013 is due by May 31, 2014. Insurance companies writing third party motor liability covers are required to report the amount of IPT on Motor Third Party Liability paid in the previous year, specified by policy and province, within the April return due to be submitted on May 31, 2014. Premium tax changes from Fiscal Reps A number of changes to premium taxes in various jurisdictions have been noted by Fiscal Reps: Germany: With effect from January 1 , 2014 insurers can file and pay Fire Protection Tax at monthly, quarterly or annual intervals depending on their previous calendar year FPT liability. The new limits are as follows: monthly reporting/payments - insurer's previous year liability greater than €2,400; quarterly reporting/payments -insurer's previous year liability greater than €400 but not more than €2,400; annual reporting/payments - insurer's previous year liability €400 or less. Greece: Fiscal Reps has received an unconfirmed report that the TEO surcharge (National Road Construction Fund) is to be abolished. It appears that the decision has been taken by the responsible minister and that the legislation to implement the change is being drafted. It is not clear whether any new premium taxes will be introduced as a consequence. Poland: Proposed amendments to the Act on Insurance and Pension Funds Supervision and Insurance Ombudsman may mean that that foreign insurers, as well as domestic insurance companies, will be required to pay the Insurance Ombudsman Charge. The planned changes include an increase in the rate of the charge from the current 0.0071% to 0.01%. Finally! Solvency II set for 2016 The European Parliament has adopted the Omnibus II Directive that completes the Solvency II Directive and finalises the new framework for insurance regulation and supervision in the EU. European Commissioner for Internal Market and Services Michel Barnier said: "The European Parliament has just taken a very important step towards the introduction of a modern and risk-based solvency regime for the insurance industry in Europe as of January 1, 2016, making it both safer and more competitive. This long-awaited and vital reform will finally become a reality." He added: "The Commission is now preparing the next stage of implementation of Solvency II, which will be the adoption of a Commission Delegated Act containing a large number of detailed implementing rules planned for the summer of this year. EIOPA is also working on a package of Implementing Technical Standards that will ensure that everything will be ready for the application of Solvency II on January 1, 2016." But concerns over Solvency II details linger The details of the EU's new Solvency II regulatory regime must be drafted correctly to ensure that the legislation works as intended and does not have negative consequences for the insurance industry and its customers, Insurance Europe's president, Sergio Balbinot, has warned. According to Insurance Europe, the Delegated Acts that are currently being drafted to put the detail on to the Solvency II Directive deviate from the intentions of the legislators in several respects, such as long-term guarantees and third-country equivalence. "If not corrected, the Delegated Acts would seriously limit insurers' ability to provide the long-term investment and stability Europe's economies need. They would have a major impact on the availability and price of insurance products, and would harm the ability of European insurers to compete internationally," Mr Balbinot said. Aon highlights local market changes in Indonesia Aon's latest Global Client Network (AGCN) Global Risk Alert has highlighted some local market changes in Indonesia. According to Nahdi Abbas, AGCN manager, Indonesia, there is local authorities, under the guidance of the new regulatory body Otoritas Jasa Keungan (OJK), are planning to revise local market underwriting guidelines. "Recently announced amendments to premium tariff rates on property risks and motor physical damage risks appear to be aimed at bolstering the solvency of local insurers, while changes to the existing earthquake pool limits provide further protection and incentive for property owners in Indonesia to more adequately insure this local exposure in the local marketplace," he said. The changes include a new fire and flood tariff, a new motor vehicle tariff, and amendments to compulsory cessions to the earthquake pool. Nahdi Abbas said that while these coverages are not compulsory for risks located in Indonesia, non-admitted insurance continues to be prohibited in this country under local law. "For policies expiring between now and the effective date of the new rates, local authorities will not accept any attempts to cancel and re-write or extend current policies in an attempt to avoid the increases," he added.

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