Last December the US government
significantly altered the Internal Revenue
Code (“IRC”) which drastically changed
how businesses and individuals are taxed.
Many provisions are still being clarified
today through Treasury Regulations and
other forms of IRS communication. This
piece focuses on how the law changes
have impacted the captive insurance
industry here on island. Many of the tax law
changes brought about by reform and often
discussed in the news, did not significantly
impact the captive or insurance industries
here, specifically the repatriation toll tax on
CAPTIVE INSIGHT
previously deferred foreign earnings. This
is because many Cayman Islands domiciled
captives that have US owners were not
historically allowed to defer earnings. Some
captives however, those structured as noncontrolled
foreign corporations (“NCFC”),
have seen their tax landscape change
dramatically as a result of tax reform
and the new Passive Foreign Investment
Company (“PFIC”) test.
It is important to note that all changes
to offshore tax law apply to all offshore
domiciles, not only Cayman.
INTRODUCTION
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