The North Carolina General Assembly has given final approval to legislation that will exempt ‘foreign’ captive insurance companies from all state taxes.
‘Foreign’ captive insurance companies are those domiciled outside of North Carolina but within the US.
North Carolina does not currently tax captives that do business in or write coverage in the state but are chartered in other states, in contrast to some US states that impose a ‘procurement tax’ on captives chartered outside their domicile but that insure risks for companies doing business in the state.
The legislation is contained in SB 99 and would offer specific tax exemptions for premium taxes, corporate income taxes, franchise taxes, privilege taxes and insurance regulatory charges imposed by the North Carolina Department of Insurance (NCDOI).
In May, it was announced that the North Carolina Captive Insurance Association (link) was considering the ‘foreign’ captive exemption, along with a ‘premium tax holiday’ in 2019, as an incentive to attract both on and offshore captives into the state.
Additionally, the General Assembly has approved three technical changes to the state’s captive insurance act, codified at SL 2018-120.
The word “investigation” was removed from GS 58-10-345(g) and GS 58-10-355 as the word “audit” sufficiently addresses the type of work that could be conducted by consultants retained to assist NCDOI with its responsibilities under the statute.
GS 58-10-385(a) has been amended so that when captives update changes in officers or directors, the bio changes will be deemed approved unless disapproved within 30 days from the Commissioner’s review of the bio affidavit.