Business · Companies · 1 hr ago
Brazilian tax law will cut taxes for local reinsurers
Brazil has passed a law to lower taxes on local reinsurers, companies that insure insurance companies.
It applies to reinsurers based in Brazil and set up as companies, including IRB Re.
From 2027, their social contribution tax rate will fall from 15% to 9%, and they will no longer face a 30% cap on using certain past losses to reduce taxes.
The extra 10% corporate income tax charge will be removed in 2030.
IRB estimates it has about R$2 billion in tax losses that it may be able to use more quickly under the new rules.
Lower tax rates may also reduce the value of tax benefits recorded on its books, so IRB expects a one-time accounting adjustment with no cash impact.
The company is completing its calculations with auditors and tax advisers, and its third-quarter results are due on November 12; the law is intended to make Brazil a more attractive place for reinsurers to operate.
A Brazilian law will lower taxes for locally based reinsurers, with the changes intended to make operating in Brazil more attractive.
The law cuts the Social Contribution on Net Income rate for local reinsurers from 15% to 9% starting in 2027.
From 2030, local reinsurers will no longer pay the 10% additional Corporate Income Tax charge.
Starting in 2027, they will also be exempt from a 30% limit on using certain tax losses, subject to a three-year condition.
IRB Re expects to reassess tax credits, which could cause a one-time accounting impact without affecting cash.
- Who
- Brazilian local reinsurers, including IRB Re.
- What
- A new law lowers some taxes and changes how local reinsurers can use tax losses.
- When
- The law was sanctioned the month before the article was published. Some changes start in 2027 and another in 2030.
- Where
- Brazil.
- Why
- The law is intended to encourage reinsurers to remain in Brazil and help develop the local industry.
This story does not have two clearly opposing sides.
The law was sanctioned, providing for lower taxation of local reinsurers.
The lower Social Contribution on Net Income rate and the removal of the 30% limit on using certain tax losses take effect.
Local reinsurers stop paying the 10% additional Corporate Income Tax charge.
IRB Re’s third-quarter balance sheet is scheduled, with the company still calculating the accounting impact of the law.
- Social Contribution on Net Income rate
- Falls from 15% to 9% from 1 January 2027
- Additional Corporate Income Tax charge
- 10% charge ends for local reinsurers in 2030
- Tax-loss offset limit
- 30% limit removed from 2027, subject to a three-year condition
- IRB tax-loss stock
- Estimated at about R$2 billion
- IRB third-quarter balance sheet
- Scheduled for 12 November
What people are saying
The objective is to encourage reinsurers to stay here, which helps attract good professionals to the industry and create a body of knowledge to protect insurers
The incentive being created was for reinsurers to leave and operate in Brazil only as admitted or occasional reinsurers