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IN THE NEWS: Bill to Close Tax Loophole for Offshore Tax Insurers Reintroduced in House and Senate

Non-U.S. based insurers and reinsurers beware. Rep. Richard E. Neal, D-Mass., ranking member of the House Ways and Means Select Revenue Subcommittee, and Sen. Robert Menendez, D-N.J., a member of the Senate Finance Committee reintroduced revised legislation in both the House and Senate designed to close a tax loophole that benefits property and casualty insurers based offshore. Insurance industry trade groups have been engaged in an on-again, off-again battle over the tax treatment of off-shore insurers and reinsurers for the last 10 years with various bills dying on the vine. The revised bill (H.R. 3157 and S. 1693) has been crafted to defer the deduction for reinsurance premiums paid to a foreign affiliate if the premium is not subject to U.S. tax. The revised law allows foreign-based insurers to elect to be taxed similarly to a U.S. company on the income from affiliate reinsurance transactions and provides for a tax credit to offset any foreign taxes paid on income from affiliate insurance transactions to prevent double taxation.

Offshore Insurance Tax Bill Reintroduced