Details from the US government's 2014 fiscal year budget suggest that offshore reinsurers will come under fire as the White House considers disallowing the deduction for non-taxed reinsurance premiums paid to foreign affiliates.
In a section on reforming the international tax system, the budget spoke of the need to limit the ability of US companies to locate their profits and operations offshore. "The tax system is...subject to gaming, as corporations manipulate complex tax rules to minimize their taxes and, in some cases, shift profits earned in the United States to low-tax jurisdictions."
The budget envisages making savings from the disallowance of deductions on offshore reinsurance premiums that would save the US taxpayer $312 million in 2014 and generate $2.621 billion by 2018. Such a development would likely prove challenging to the Bermuda market.
US budget, offshore, Bermuda, tax