From: Captive International
US states could increase their efforts to raise tax from captives in coming months as they seek to raise money to offset reduced revenues during the COVID-19 pandemic, according to Dan Kusaila, a tax partner at Crowe.
Speaking on a Captive Insurance Companies Association (CICA) panel, titled “Non-Domiciliary State Taxation of Captives”, Kusaila warned that states will be looking for any way to raise money, at a time when economic activity has declined sharply.
“We could see increased activity from states as we come out of this COVID-19 crisis. A lot of states will be looking for revenue and this is an area where it can be increased,” said Kusaila.
US states all have their own rules for collecting tax from captives, with some charging self-procurement tax or premium tax, and some also charging income tax. In many cases it can be unclear exactly where, and how much, tax captives should be paying.