Too early to say how the minimum tax will affect captives

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The potential impact of proposed global minimum tax rates remains difficult to assess, according to Marsh.

In a briefing published last week, the risk management group noted that the OECD/G20 Inclusive Framework, which proposes an overall minimum corporate tax rate of 15%, has already won wide support in more than 130 countries. This includes popular captive domiciles, such as Bermuda, Cayman Islands, Guernsey, Luxembourg, Singapore, Isle of Man, British Virgin Islands, Malta and Hong Kong.

Still, he notes that any minimum rate could lead to further changes, leaving the effects uncertain.

“There have been discussions about how different governments might adjust other taxes if the global 15% minimum tax is passed. Potential exclusions from the tax are also being discussed,” the briefing states.

“The impact of the global minimum tax should be more easily determined once there is more guidance on its implementation and rollout.”

He added: “The impact of the global minimum tax should be more easily determined once there is more guidance on its implementation and rollout.”

Captives will likely remain popular with many, however, according to Marsh. His Captive Landscape Report 2020 found that only 30% of captive owners viewed the realization of tax benefits as a driver of captive value.

“Given that most captive owners do not view taxation as a driver of captive insurer use or location, the impact of a minimum tax is likely to be less relevant,” he writes.

Marsh, Tax rates, Risk management, OECD/G20 Inclusive Framework, Insurance, Reinsurance, Global

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