Restrictions on domicile of reinsurers revised
When the Insurance Regulator overhauled the reinsurance regime in 2011, the new regulation it introduced prohibited the registration of entities whose head office was located in a tax shelter.
In particular, Section 18 of Insurance Regulator Resolution 35,615/2011 stated that:
"No authorization shall be granted to branches of foreign companies whose head office is located in countries that levy less than 20% Income Tax (or similar tax) or those where their local regulations establish secrecy on shareholding of corporations or in those jurisdictions, territories or Countries with low or no taxation called 'tax shelters' and/or countries or territories that are non-cooperative in the framework of the world fight against money laundering and terrorist financing in accordance with the criteria defined by the Financial Action Task Force(FATF)."
This language was roughly based on the wording of the Income Tax Law, which also included anannex setting out an exhaustive blacklist of non-cooperative jurisdictions. The Insurance Regulatorthus would not authorise the registration - and in fact cancelled existing registrations - of entitieswhose head office was located in any jurisdiction included on the blacklist.
In 2013 the Argentine government amended the Income Tax Law to remove this blacklist. Instead, the Tax Authority now publishes a list of cooperative jurisdictions, or whitelist, which will be updated from time to time.
The Tax Authority finally published this white list in late 2013. Several jurisdictions that were previously on the blacklist are now included on the whitelist - most notably, Bermuda.
The Insurance Regulator was aware of this change in regulation and on March 25 issued Resolution 38,284/2014, which amends the wording of Resolution 35,615/2011 to reflect the change. The new wording now states that in order for an entity to be registered as an admitted reinsurer, its head office must be based in a jurisdiction which is included on the whitelist and considered "cooperative" by the FATF.
As a consequence of this new regulation, entities domiciled in previously non-acceptable jurisdictions can now register as admitted reinsurers.
Date: July 08 2014
For further information on this topic please contact Martín G. Argañaraz Luque