El Salvador: Tax Reform Drives Off Reinsurers

Some reinsurance companies argue that the country won't be attractive for business if the tax reform bill gets approved.

Thursday, November 26, 2009

With this bill they will have to pay 5% income tax, and those reinsurers based on tax havens will be charged with an additional 25%.

From Elsalvador.com: "In a letter to the Salvadoran Association of Insurance Companies, reinsurer Hannover Re remarked they are assessing whether they maintain their operations in the country, or if they increase some reinsurance contracts, especially those with variable conditions, which could become more expensive with the tax hike. Another reinsurer, Gen Re, shares this point of view".

More on this topic

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The government has agreed to modify the terms of the tax reform proposal to take into account criticisms made by the private sector.

Salvadoran private companies have outlined to officials the adverse effects that the country would face if the proposed new tax measures were applied, receiving signals of openness to a discussion from the Government, who for the first time since 2009 and 2010 has agreed to negotiate tax reforms with entrepreneurs.

Panama as an International Reinsurance Center

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A law intends to attract reinsurance companies, by giving them the same benefits enjoyed by the Headquarters of Multinational Corporations.

The information was confirmed by the Panamanian superintendent Luis Della Togna, who added that the project could be ready before the end of the year.

Reinsurers to Pay $3.4 Million for Tropical Storm Ida

December 2009

In El Salvador, payments for Ida damage claims will be larger than those caused by Hurricane Stan.

The figure is an estimate by ASES, the Salvadoran Association of Insurance Companies, after a preliminary assessment of reconstruction costs.

"These figures arise in the midst of a tax reform discussion that could drive away 8 reinsurers that operate in the country.

El Salvador: Tax Reform to be Discussed with Companies

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The Government will create a commission to discuss the tax reform project with private enterprises.

Alex Segovia, Technical Secretary for the President, explained that this commission will analyze the proposal, in order to modify aspects that may could affect the country.

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