INSURERS' TAX BURDEN REDUCED
The reduction of tax burden on insurers will be probably felt in 2005 when their proceeds will be taxed according to the general order. This became clear on Wednesday, October 27, when the National Assembly approved at first reading the draft bill on amendments to the Corporate Income Taxation Act.The voting passed without any surprises and the MPs approved the Cabinet-proposed changes. As of next year the profit tax for all companies in Bulgaria will be reduced from the current 19.5% to 15 per cent. The Government's motives specify that about BGN13.5MN will remain in the hands of business in that way. By the passed amendment to the Corporate Income Taxation Act the insurance branch will be relieved from the corporate income tax and will be paying a tax on the profits like all other enterprises. Until now insurers were paying a tax on the premiums - 7% of their amount for property insurance, and 2% of the premiums' size in life insurance. However, the draft bill on amendments to the Corporate Income Taxation Act stipulates an additional indirect 3% tax on the gross insurance premiums for the various kinds of insurances, except aviation and maritime ones. The tax shall be calculated in the insurance premiums and will be at the expense of insurers or insured. Life insurance companies shall be relieved from that specific tax. Some time ago Maxim Sirakov, Vice President of Allianz Bulgaria insurance and reinsurance company said in front of the BANKER weekly:In 2001 the Association of Bulgarian Insurers moved in a proposal to the Finance Ministry. By the introduction of the profit tax the State budget will collect less revenues from insurers as compared to the so far effective system of premiums' taxation. Therefore, an indirect tax is projected as well. The insurers will insist on not introducing it.It's clear, however, that despite the disagreement of the branch the 3% tax on premiums will be introduced in property insurance.