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The second stage of implementation of the Tax Code
in the insurance system is the transition from 2012 to the
general system of income taxation of the insurer with
specific features for the insurance system.
Stage VIII
(2013—2014) — the payment of income
tax by insurance companies at the rate of 19 % (until
31.12.2013) and 16 % (since 01.01.2014) was introduced.
The situation that developed in the previous historical
stage of development in the future could lead to major
contradictions between fiscal
experts and insurance
companies. As a result, Law № 5412 introduced
amendments to the Tax Code of Ukraine, which relate, in
particular, to the taxation of insurance activities, which
came into force on 01.01.2013 [9].
Stage IX
(2015 — present) — the Tax Code introduces a
two-tier system of taxation of insurance companies, typical
of EU countries. It is based on
income tax on insurance and
other non-insurance activities and a 3 % income tax in the
form of insurance premiums (insurance payments).
There are two objects of taxation for insurers — income
from all economic activities of the insurance company
and income from insurance activities. Also in § 136.5 of
art. 136 of the Tax Code states that the tax on income from
insurance activities is part of the income tax.
When conducting insurance activities simultaneously
with the income tax rate of 18 %, income tax rates are set in
the following amounts:
•
3 % under insurance contracts from the object of
taxation (the amount of insurance payments, insurance
premiums, insurance premiums accrued under
insurance and co-insurance contracts). In this case,
insurance payments, insurance premiums, insurance
premiums under co-insurance
contracts are included
in the object of insurer taxation only in the amount of
its share of the insurance premium provided by the co-
insurance contract;
•
0 % under long-term life insurance contracts,
voluntary health insurance contracts, and insurance
contracts within the framework of non-state pension
provision, in particular supplementary pension
insurance contracts [9].
The object of taxation of the insurer (with the rate of
18 %) is also the profit with the
source of origin in Ukraine
and abroad, which is determined by adjusting (increasing
or decreasing) the pre-tax financial result (profit or loss)
specified in the financial reporting of the enterprise
in accordance with national accounting standards or
international financial reporting standards, for differences
that arise in accordance with the provisions of Section III of
the Tax Code.
Income tax charged by an insurer at the rate of 3 %
is a difference that reduces the pre-tax financial result
of such insurer. This is the main indicator of adjustment.
Subsequently, the financial result of the insurer before tax
is adjusted in connection with the formation and use of
insurance reserves (or increase or decrease the amount of
the financial result).
The financial result before taxation of the insurer
increases:
•
the amount of costs for
the formation of insurance
reserves (technical or mathematical) under national
accounting standards or international financial
reporting standards;
•
for the amount of adjustment (reduction) of
insurance reserves (technical or mathematical) by the
methodology determined by National Commission
for State Regulation of Financial Services Markets in
agreement with the State Fiscal Service of Ukraine.
The pre-tax financial result of insurance companies
decreases:
•
the amount of adjustment (reduction) of insurance
reserves (technical or mathematical), which increased
the pre-tax financial
result following national
accounting standards or international financial
reporting standards;
•
the amount of the insurance reserve (technical or
mathematical).
Determining the size of insurance reserves by risk types
of insurance and by type of life insurance are different. In
risky types of insurance, technical reserves are formed,
which include the reserve for unearned premiums, loss
reserves which are mandatory for formation, as well as
special reserves (catastrophe reserve, loss fluctuation
reserve) formed by companies that carry out certain
types of compulsory insurance (compulsory
insurance of
civil liability of owners of land vehicles and compulsory
insurance of civil liability for nuclear damage), the
conditions of which require additional guarantees.
Life insurance companies form life insurance reserves,
which are divided into mathematical reserves (reserves
for long-term liabilities) and reserves for due insurance
payments.
It should be noted that the Tax Code for all income
taxpayers, including insurers, increased from 10 to
20 million UAH. the maximum amount of annual income
for those taxpayers who do not have to pay monthly
advance payments of income tax.
Having analyzed the historical stages of development
of the insurance system tax regulation of Ukraine, we
can graphically depict in Fig. the ratio of the amount of
income tax paid by insurance companies to the number of
insurance companies in Ukraine for 2000—2019.
The graphic image shows a completely dispro-
portionate dependence of taxes
paid by insurers on their
amount. Insurance companies, which form the basis of
the insurance system of Ukraine, show a declining trend
since 2010, when their number was 456, and in 2019 —
233 insurers. The logical declining development should
be characterized by the payment of taxes by insurance
companies, however, as we see from Fig., the amount
of income tax during the analyzed years fluctuated in
waves — absolutely increased from 2000—2008 to the
level of 620.2 million UAH
and after the onset of the
economic crisis in the world in 2008, which affected
