HOUSE BILL NO. 352
AN ACT TO AMEND TITLE 18 OF THE DELAWARE CODE IN ORDER TO CHANGE THE PREMIUM TAX RATE STRUCTURE FOR CAPTIVE INSURANCE COMPANIES AND TO PROVIDE FOR CONSOLIDATED REPORTING FOR TWO OR MORE CAPTIVE INSURANCE COMPANIES UNDER COMMON OWNERSHIP AND CONTROL.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend Section 6914 of Title 18, Delaware Code, by redesignating Subsection (b) as Subsection (c) and by striking Subsection (a) in its entirety and substituting in lieu thereof new Subsections (a) and (b) as follows:
(a) Each captive insurance company shall pay to the Commissioner no later than March 1 of each year, a tax at the rate of:
seven-tenths of one percent on the first twenty million dollars, five-tenths of one percent on the next twenty million dollars, three-tenths of one percent of the next twenty million dollars, and one-tenth of one percent on each dollar thereafter, on the gross amount of all premiums collected or contracted for on policies or contracts of insurance covering property and risks in this State and on property and risks situated elsewhere upon which no premium tax is otherwise paid with respect to the year ending December 31 next preceding, after deducting from the gross amount of premiums subject to the tax the amount received as reinsurance premiums and the amount of dividends, return premiums and similar returns to policyholders, whether paid in cash, credited or applied in reduction of premiums, which shall include dividends on unabsorbed premiums or premium deposits returned or credited to policyholders.
(b) Two or more captive insurance companies under common ownership and control shall be taxed as though they were a single captive insurance company. For the purposes of this subsection common ownership and control shall mean
(1) in the case of stock corporations, the direct or indirect ownership of 80 percent or more of the outstanding voting stock of two or more corporations by the same shareholder or shareholders; and
(2) in the case of mutual corporations, the direct or indirect ownership of 80 percent or more of the surplus and the voting power of two or more corporations by the same member or members.
Section 2. If any provision of this Act or the application thereof to any person or circumstance is held invalid such invalidity shall not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to that end the provisions of this Act are declared to be severable.
Section 3. This Act shall become effective for tax years commencing on or after January 1, 1989.
Approved January 25, 1990.