Due to the continued growth in business, new territories are constantly added and as the premium grows so does the potential risk of non-compliance for its premium taxes. The insurer needs to be fully aware of the 60 or so premium taxes in the EU in order to submit accurate and timely returns to the relevant tax authorities and make the appropriate payments.
Furthermore as the program extends beyond the EU then the insurer needs to be vigilant about premium taxes that are levied at provincial, state or canton level (such as Canada, Australia and China) as well as national level. Moreover, types of insurance that are regarded as exempt in the EU may be subject to premium taxes outside the EU such as reinsurance.
The insurer was particularly concerned about any under declaration of premium taxes and how they may adversely impact the insurer’s position in relation to reputational damage, corporate governance and provisions on the statutory accounts. Furthermore it was feared that any errors in premium tax calculations would adversely affect the product pricing of the premium and relationship with the tax authorities which could ultimately lead to penalties and interest payments for noncompliance.
The insurer engaged with FiscalReps who were able to identify the correct premium tax rates in 30 countries with based upon the Classes of Business written, the nature of the product and the risk involved.
FiscalReps provided an accurate and complete analysis of the findings based on the current legislation, national premium tax cases, tax authority guidance, discussions with international tax advisors and dialogue with contacts in the various tax offices.
The findings needed to take account of situations where tax authority guidance could supersede existing legislation or the findings from case law might not be incorporated into the current legislation.
FiscalReps findings provided the client with the rationale to challenge its existing procedures and support a secure methodology going forward. This provided the insurer with the confidence to overcome any concerns in relation to premium tax application within its global insurance program.