Report to Congress on the Effect on U.S. Reinsurance Corporations of the Waiver by Treaty of the Excise Tax on Certain Reinsurance Premiums

摘要

The Treasury's 'Report to Congress on the Effect on U.S. Reinsurance Corporations of the Waiver by Treaty of the Excise Tax on Certain Reinsurance Premiums' examines the competitiveness of U.S. reinsurance companies vis-a-vis foreign companies in light of existing treaty policy and the current one percent excise tax on certain reinsurance premiums. The study draws a distinction between foreign firms resident in 'full-tax' and those in 'no-tax' jurisdictions. With respect to foreign companies from full-tax jurisdictions, the study finds no evidence that waiving the one percent excise tax by treaty results in a competitive advantage for foreign insurers. However, in the case of reinsurers resident in no-tax jurisdictions, waiver of the excise tax generally increases the foreign firm's competitive position. An added complexity examined in the study relates to controlled foreign corporations in non-tax jurisdictions and the treatment of U.S. shareholders under Subpart F.