IPT
IPT and its variations is an international indirect tax levied on risk contracts issued by insurance companies and captives. IPT covers many insurance classes, although life and ship & hull are often excluded and re-insurance is not taxed.
The most common uncertainty with IPT is how much is due and which rates to apply, in the EU alone businesses classes can be split down to 147 lines.
Whilst the broad principles for international IPT are similar, there are challenges meeting its obligations due to local/national variations in the way it is structured and administered. In the Europe Union (EU), for instance, each state is free to set its own rules. Unlike Value Added Tax, there is no central EU co-ordination procedure advising on how IPT should be applied. As a result, uncertainty extends to who is liable to account for IPT— the insurer, the insured or the broker?
An example of a simple territory, the UK, the tax is calculated on gross premiums written but note there are varying regulations on the inclusion of additional costs such as broker fees. There are two different insurance premium tax rates, a standard rate (5 per cent) and a higher rate (17.5 per cent).
As an insurer providing taxable insurance, you are required to register and account for insurance premium tax.
