TMF Group update on IPT rate changes globally
TMF Group has highlighted a number of insurance premium tax (IPT) rate changes from around the globe, together with other tax changes impacting global insurance programmes.
Slovenia: Fire Brigade Charge
The Slovenian tax authorities have announced an increase in the fire brigade charge (FBC) rate from current 5% to 9%, with effect from 1 October 2022. The FBC rate increase has been introduced by the Official Gazette of the Republic of Slovenia no. 68/22, which was published on 13 May 2022. The IPT rate is not expected to change at this point.
Hungary: Additional IPT
The Hungarian tax authority has introduced an additional temporary tax on insurance premiums for the period 1 July 2022 to 31 December 2023. As per the Hungarian Journal no. 93 dated 4 June 2022, this tax will apply in addition to the existing IPT regime and will also apply to life insurance premiums.
According to TMF Group, the additional IPT is a progressive tax, meaning an insurer’s rate increases depending on the total gross premium income it collects in a certain period. The rates range from 4% to 14% for most non-life insurance classes, and from 2% to 7% for life insurance. The rates and assessment periods are expected to change on 1 January 2023.
Honduras: Fire Brigade Charge
FBC has been introduced in Honduras at the rate of 5% on insurance premiums covering fire and natural forces risks. This new contribution by “Ley del Heroico y Benemerito Cuerpo de Bomberos de Honduras” was officially published on 20 February 2020, Article 75 of Legislative Decree No. 56/2019. The Official Gazette/Agreement no. 7417-2022 was published on 3 May 2022, specifying the rate that will be applied to new policies, endorsements and renewals issued on and after 3 May 2022.
Norway: Norwegian Natural Perils Pool
Circular no. 3/2022 of the Norwegian Natural Perils Pool (NNPP) dated 13 June 2022 has set the rate for the 2023 NNPP contribution. The rate will remain at 0.0065% of the total insured value.
Anguilla: Goods and Services Tax
The Goods and Services Tax (GST) has been introduced in Anguilla at the rate of 13%, with the passing of the Goods and Service Act No. 18/2021. GST comes into force with effect from 1 July 2022. GST is a tax on the consumption of goods and services, which should be charged on imports as well as goods and services supplied domestically by GST-registered businesses. Health, life and international transport insurance should be exempt.
Canada – Alberta: IPT for unlicensed insurance
Alberta’s government has introduced amendments to the Insurance Act. Bill 16/Insurance Amendment Act 2022 reduces the IPT rate on unlicensed insurance from 50% to 10% of the premium payable. The bill received royal assent and came into force on 31 May 2022.
Singapore: Goods and Services Tax
The Singapore Minister for Finance announced in the 2022 budget that the GST rate will be increased in two steps:
- From 7% to 8% with effect from 1 January 2023
- From 8% to 9% with effect from 1 January 2024.
Purchases of goods and services from GST-registered businesses before 1 January 2023 will be subject to GST at 7%, and purchases on or after 1 January 2023 will be subject to GST at 8%. All types of insurance should be subject with GST, except a few lines of business such as international transportation of goods and passengers and export credit.
Also, from 1 January 2023, the Overseas Vendor Registration regime will be extended to include imported non-digital services. From this date, suppliers of remote services that reside outside Singapore will be required to register for GST in Singapore if they:
- Have an annual global turnover exceeding $1m; and
- Make B2C supplies of remote services to customers in Singapore exceeding $100,000.
Once registered for GST, the overseas supplier will be required to charge and account for GST on B2C supplies of remote services made to customers in Singapore.
Sri Lanka: Value Added Tax
The rate of Sri Lankan VAT has increased from 8% to 12% with effect from 1 June 2022 and should apply to all types of insurance, except life insurance and reinsurance. The change was published in the Gazette of the Democratic Socialist Republic of Sri Lanka on 31 May 2022.
Palau: Non-resident Tax
On 29 September 2021 Palau’s President signed into law RPPL 11-11, the Palau Goods and Services Tax (PGST) Act. The law comprehensively reforms Palau’s tax code with effect from 1 January 2023. While insurance will be exempt from PGST, the law also introduces a non-resident tax (withholding tax) that requires tax to be withheld from payments to non-residents. The rate of withholding on insurance and reinsurance premiums will be 5%.
Venezuela: Tax on large financial transactions
The reform of the Law on Large Financial Transactions implements a 3% tax on operations in currencies or cryptocurrencies other than the Venezuelan Bolívar, carried out by natural and legal persons. This new tax was introduced by the Extraordinary Official Gazette 6.687, on 25 February 2022, with effect from 28 March 2022.
