From: Captive International
There is very little consistency between countries when it comes to insurance tax reporting, and captives managers need to stay across the nuances to avoid trouble. Daniela Dinkova of Sovos explores some of the differences.
Just like traditional insurers, captives face the perpetual headache of Insurance Premium Tax (IPT) reporting standards.
Using a native speaker to assist with tax filing is crucial to avoid errors.”
Different territories have different tax points: for example, the tax point in the majority of territories is the premium received date, but some territories require declaration of the liabilities on invoice date, booked date or inception date.
Ensuring compliance with all these standards can feel overwhelming for even the most seasoned of captive insurance managers, especially if IPT reporting is undertaken only once a year. When reporting season comes around, new tax rates, classifications, and good old-fashioned forgetfulness, can rear their heads.
Furthermore, depending on the size of the business and scale of risk, one mistake could not only cost a captive and its insured organisation significant money and shareholder value, but negatively affect brand reputation in the long run—with both the tax authority and the market.