HF 2121 (LSB 5285HV (3) 90)

HOUSE FILE 2121

BY  COMMITTEE ON COMMERCE

(SUCCESSOR TO HSB 535)

A BILL FOR

An Act relating to the taxation of captive companies, and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 432.1A, subsection 2, paragraph c, Code 2024, is amended to read as follows:
   c.  The amount of reinsurance tax due from a captive company under paragraph “a” shall be calculated as follows:
   (1)  Two-tenths Two hundred thousandths of one percent on the first twenty million dollars of assumed reinsurance premiums written.
   (2)  One-eighth One hundred twenty-five thousandths of one percent on the twenty million dollars of assumed reinsurance premiums collected written after the first twenty million dollars of assumed reinsurance premiums collected written under subparagraph (1).
   (3)  Five Forty-five thousandths of one percent on each dollar the twenty million dollars of assumed reinsurance premiums collected written after the twenty million dollars collected written under subparagraph (1) and the twenty million dollars collected written under subparagraph (2).
   (4)  Twenty thousandths of one percent of each dollar of assumed reinsurance premiums written after the twenty million dollars written under subparagraph (1), the twenty million dollars written under subparagraph (2), and the twenty million dollars written under subparagraph (3).
    Sec. 2.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to the calculation of the amount of reinsurance tax (tax) due from a captive company.
   The bill changes the amount of tax due from a captive company on the first $20 million of assumed reinsurance premiums from two-tenths of 1 percent to two hundred thousandths of 1 percent; the amount of tax due on the $20 million of assumed reinsurance premiums written after the first $20 million of assumed reinsurance premiums are written from one-eighth of 1 percent to one hundred twenty-five thousandths of 1 percent; and the amount of tax due on each dollar of assumed reinsurance premiums written after the first $40 million of assumed reinsurance premiums from 5 percent on each dollar to forty-five thousandths of 1 percent.
   The bill creates a new tier of reinsurance tax due on each dollar of assumed reinsurance premiums after the first $60 million of assumed reinsurance premiums in the amount of twenty thousandths of 1 percent of each dollar.
   The bill takes effect upon enactment.