§ 12-202 — Tax on direct premiums of domestic insurance companies. Exception.

Connecticut § 12-202

• Jurisdiction: Connecticut
• Title 12: Taxation
• Ch. 207: Insurance Companies and Health Care Centers Taxes

Text

(a) Each domestic insurance company shall, annually, pay a tax on the total net direct premiums received by such company during the calendar year next preceding from policies written on property or risks located or resident in this state. The rate of tax on all net direct insurance premiums received (1) on or after January 1, 1995, and prior to January 1, 2018, shall be one and three-quarters per cent, and (2) on and after January 1, 2018, shall be one and one-half per cent. The franchise tax imposed under this section on premium income for the privilege of doing business in the state is in addition to the tax imposed under chapter 208. In the case of any local domestic insurance company the admitted assets of which as of the end of an income year do not exceed ninety-five million dollars, eighty per cent of the tax paid by such company under chapter 208 during such income year reduced by any refunds of taxes paid by such company and granted under said chapter within such income year and eighty per cent of the assessment paid by such company under section 38a-48 during such income year shall be allowed as a credit in the determination of the tax under this chapter payable with respect to total net direct premiums received during such income year, provided that these two credits shall not reduce the tax under this chapter to less than zero, and provided further in the case of a local domestic insurance company that is a member of an insurance holding company system, as defined in section 38a-129, these credits shall apply if the total admitted assets of the local domestic insurance company and its affiliates, as defined in said section, do not exceed two hundred fifty million dollars or, in the alternative, in the case of a local domestic insurance company that is a member of an insurance holding company system, these credits shall apply only if total direct written premiums are derived from policies issued or delivered in Connecticut, on risk located in Connecticut and, as of the end of the income year the company and its affiliates have admitted assets minus unpaid losses and loss adjustment expenses that are also discounted for federal and state tax purposes and that for such local domestic insurance company and its affiliates, as defined in section 38a-129, do not exceed two hundred fifty million dollars. (b) Notwithstanding the provisions of subsection (a) of this section, the tax shall not apply to surplus lines insurance policies issued by domestic insurance companies designated as surplus lines insurers pursuant to section 38a-271a .

Legislative History

(1949 Rev., S. 1884; 1953, S. 1083d; 1957, P.A. 115; 1959, P.A. 140, S. 1; 1961, P.A. 604, S. 1; 1972, P.A. 285, S. 9; P.A. 73-350, S. 2, 27; P.A. 74-269, S. 1, 2; P.A. 80-482, S. 341, 348; P.A. 90-28, S. 6; 90-333, S. 4; P.A. 93-74, S. 4, 67; May Sp. Sess. P.A. 94-4, S. 4, 5, 85; P.A. 95-160, S. 64, 69; 95-303, S. 1, 3; P.A. 17-125, S. 3; June Sp. Sess. P.A. 17-2, S. 622.) History: 1959 act imposed tax for years 1961, 1962 and 1963; 1961 act changed the rate payable on net direct life insurance premiums from 1.75% to 2.5%, and increased the rate on other net direct premiums from 2% to 2.75%, deleted obsolete references to taxes payable in past years, and stated that franchise tax is in addition to excise tax imposed under Sec. 12-203 of 1959 Supplement; 1972 act made 2.5% rate applicable to net direct insurance premiums received before July 1, 1973, and established 2% rate on net direct premiums received on and after that date; P.A. 73-350 deleted tax on total net direct annuity considerations, stated that franchise tax is in addition to tax imposed under chapter 208 and added provisions re tax credits for local domestic insurance companies, effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973; P.A. 74-269 substituted “paid” for “payable” in tax credit provision, reduced 80% credit by “any refunds of taxes paid by such company and granted under said chapter (208) for such income year” and specified that credit is applicable to tax “payable with respect to total net direct premiums received during such income year”, effective May 29, 1974, and applicable to tax payable on premiums received after December 31, 1972; P.A. 80-482 made credit applicable to companies with assets not exceeding $75,000,000 rather than $50,000,000, included new 80% credit for assessments paid under Sec. 38-53b, limited credits so that tax not reduced to less than zero and limited credits to companies which are members of a holding company system to companies with assets not exceeding $150,000,000 rather than $100,000,000; P.A. 90-28 deleted reference to a tax on investment income imposed under repealed Sec. 12-203; P.A. 90-333 increased the maximum amount of assets with respect to which a company may be allowed the tax credit provided under this section from $75,000,000 to $95,000,000 and in the case of an insurance holding company system such maximum with respect to the affiliated companies is increased from $150,000,000 to $175,000,000; P.A. 93-74 increased the maximum amount of assets with respect to which an affiliated company may be allowed the tax credit provided under this section from $175,000,000 to $200,000,000, effective May 19, 1993, and applicable to taxable years commencing January 1, 1993; May Sp. Sess. P.A. 94-4 increased the maximum amount of assets with respect to which an insurance holding company may be allowed the tax credit provided under section from $200,000,000 to $250,000,000, effective June 9, 1994, and applicable to taxable years commencing on or after January 1, 1994; and also deleted obsolete provisions and decreased the rate of tax on net direct premiums from 2% to 1.75%, effective January 1, 1995, and applicable to premiums due on or after said date; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 95-303 added alternative re application to companies with total direct written premiums derived from policies issued or delivered in Connecticut on risk located in Connecticut having admitted assets minus unpaid losses and loss adjustment expenses which do not exceed $250,000,000, effective July 6, 1995, and applicable to taxable years commencing on or after January 1, 1996; P.A. 17-125 designated existing provisions re domestic insurance company to pay tax on total net direct premiums as Subsec. (a), and amended same by making technical changes and added Subsec. (b) re surplus lines insurance policies issued by certain domestic insurance companies, effective July 1, 2017; June Sp. Sess. P.A. 17-2 amended Subsec. (a) to decrease rate of tax on net direct premiums received on and after January 1, 2018, from 1.75 per cent to 1.5 per cent, effective October 31, 2017. Cited. 16 CS 134.