a. Recent changes introduced by Finance Acts 2019 and 2020:

i. Definitions:

• Investment income: Section 16(6) of CITA (as amended) defines investment income for life insurance companies as income derived from the investment of shareholders’ funds.
• Gross premium and gross income: Section 16(13) of CITA (as amended) defines gross premium as the total premiums written, received, and receivable, excluding unearned premiums and premiums returned to the insured. Gross income includes all investment income (excluding franked investment income), fees, commissions, and income from other assets but excludes premium received and claims paid by reinsurers.

ii. Minimum tax payable:

• Section 16(12) of CITA (as amended) provides that the tax payable by any insurance company for any year of assessment shall not be less than:
  • 0.5% of the gross premium for non-life insurance business, and
  • 0.5% of gross income for life insurance businesses.
• However, all applicable minimum tax rates under this section are reduced to 0.25% for tax returns filed for any assessment year falling between January 1, 2020, and December 31, 2021.

iii. Losses can be carried forward indefinitely: Insurance companies are now allowed to carry forward losses indefinitely for tax purposes.

iv. Other changes:

• Based on section 16(8) of CITA (as amended), insurance companies, other than life insurance companies, are allowed to deduct reserves for unexpired risks and outstanding claims and outgoings for tax purposes. Any unused amounts for settling claims and outgoings will be added to the total profits of the following year.

B. Additional documents/information to be filed by insurance business An insurance company that engages the services of an insurance agent, a loss adjuster and an insurance broker, shall include in its annual tax returns, a schedule showing the names and addresses of the insurance agent, loss
adjuster and an insurance broker, the date their services were employed and terminated, and payments made to them. An insurance company is expected to maintain the details and schedule of
policies and risks accepted in a given year, and the computation of unexpired risks associated with them. The schedule should comprise the name of the policy holder, type of policy, period of the policy, amount of the premium and expired risk computed therefrom.
A schedule detailing the specific items making up the estimated amount of outstanding claims and outgoings shall be prepared, by insurance companies. Insurance companies shall maintain a schedule of estimated claims and outgoings that constitute the amount deducted every year.