(A) A captive insurance company shall pay to the department by March first of each year, a tax at the rate of four-tenths of one percent on the first twenty million dollars and three-tenths of one percent on each dollar after that, up to a maximum tax of one hundred thousand dollars. Taxes are based on the direct premiums written or contracted for on policies or contracts of insurance written by the captive insurance company during the year ending December thirty-first next preceding, after deducting from the direct premiums subject to the tax the amounts paid to policyholders as return premiums which must include dividends on unabsorbed premiums or premium deposits returned or credited to policyholders.
(B) A captive insurance company shall pay to the department by March first of each year, a tax at the rate of two hundred and twenty-five thousandths of one percent on the first twenty million dollars of assumed reinsurance premium, and one hundred fifty thousandths of one percent on the next twenty million dollars and fifty thousandths of one percent on the next twenty million dollars and twenty-five thousandths of one percent of each dollar of assumed reinsurance premium after that up to a maximum tax of one hundred thousand dollars. However, reinsurance tax does not apply to premiums for risks or portions of risks which are subject to taxation on a direct basis pursuant to subsection (A). A premium tax is not payable in connection with the receipt of assets in exchange for the assumption of loss reserves and other liabilities of another insurer or other funding mechanism under common ownership and control if the transaction is part of a plan to discontinue the operations related to the loss reserves and other liabilities being assumed of the other insurer or funding mechanism and if the intent of the parties to the transaction is to renew or maintain business with the captive insurance company.
(C)(1) If the aggregate taxes to be paid by a captive insurance company calculated under subsections (A) and (B) amount to less than five thousand dollars in any year, the captive insurance company shall pay a minimum tax of five thousand dollars for that year. However, in the calendar year in which a captive is first licensed, the minimum tax must be prorated on a quarterly basis.
(2) For captives licensed in the:
(a) first quarter, the prorated minimum tax is five thousand dollars;
(b) second quarter, the prorated minimum tax is three thousand seven hundred fifty dollars;
(c) third quarter, the prorated minimum tax is two thousand five hundred dollars; and
(d) fourth quarter, the prorated minimum tax is one thousand two hundred fifty dollars.
(3) In the calendar year in which a captive is first licensed, if the aggregate taxes to be paid by a captive insurance company calculated under subsections (A) and (B) amount to less than the minimum tax prorated on a quarterly basis, the captive insurance company shall pay the prorated minimum tax for that calendar year.
(4) If the aggregate taxes to be paid by a captive insurance company calculated under subsections (A) and (B) amount to more than one hundred thousand dollars in any year, the captive insurance company shall pay a maximum tax of one hundred thousand dollars for that year.
(D) A captive insurance company failing to make returns or to pay all taxes required by this section, is subject to the relevant sanctions of this title.
(E) Two or more captive insurance companies under common ownership and control must be taxed, as separate captive insurance companies.
(F) For the purposes of this section, "common ownership and control" means:
(1) in the case of stock corporations or limited liability companies, the direct or indirect ownership of eighty percent or more of the outstanding voting stock or membership interests of two or more corporations or limited liability companies by the same person or entity;
(2) in the case of nonprofit corporations, the direct or indirect ownership of eighty percent or more of the voting power of two or more nonprofit corporations by the same member or members; and
(3) in the case of mutual corporations, the direct or indirect ownership of eighty percent or more of the capitalization and the voting power of two or more corporations by the same member or members.
(G) In the case of a branch captive insurance company, the tax provided for in this section applies only to the branch business of the company.
(H) In the case of a sponsored captive insurance company, with respect to any:
(1) unincorporated protected cells, the aggregate taxes to be paid as calculated under subsections (A) and (B) must be calculated and paid on a consolidated basis;
(2) incorporated protected cells that are affiliates of the sponsor, the aggregate taxes to be paid as calculated under subsections (A) and (B) must be calculated and paid on a consolidated basis; and
(3) incorporated protected cells that are not affiliates of the sponsor, the aggregate taxes to be paid as calculated under subsections (A) and (B) shall apply to each incorporated protected cell.
(I) The tax provided for in this section constitutes all taxes collectible under the laws of this State from a captive insurance company, and no other occupation tax or other taxes may be levied or collected from a captive insurance company by the State or a county, city, or municipality within this State, except ad valorem taxes on real and personal property used in the production of income.
HISTORY: 2000 Act No. 331, Section 1; 2001 Act No. 82, Section 32, eff July 20, 2001; 2002 Act No. 188, Section 6, eff March 12, 2002; 2003 Act No. 73, Section 24.F, eff June 25, 2003; 2004 Act No. 291, Section 25, eff July 29, 2004; 2006 Act No. 332, Section 18, eff June 1, 2006; 2018 Act No. 251 (H.4675), Section 1, eff May 18, 2018.
Effect of Amendment
2018 Act No. 251, Section 1, in (F)(3), substituted "capitalization" for "surplus" following "eighty percent or more"; and inserted (H) and redesignated (H) as (I).