Domestic and foreign insurance companies, except purely mutual beneficial associations and nonprofit hospital and medical associations, are subject to this tax, imposed at a rate of 2 percent on premiums, premium deposits or assessments received by an insurance company. Although in some states this tax is reported to the state agency that regulates insurance companies, in Pennsylvania the gross premiums tax is reported and paid to the Department of Revenue.
· In addition, a retaliatory fee is imposed on companies incorporated or domiciled in other states that impose a higher tax burden upon Pennsylvania companies doing business there.
· A 3 percent surplus lines tax rate is imposed on policies written with unlicensed, non-life insurers. This tax is collected and remitted by licensed surplus lines insurance agents.
· Companies transacting Marine insurance business within the commonwealth are subject to a 5 percent tax on their underwriting profits in lieu of a tax on their premiums.
Excluded from the tax are canceled policies; premiums for reinsurance; annuity considerations and dividends; earnings of participating members of mutual or stock insurance companies; premiums written by automobile insurance companies for extraordinary medical benefit coverage; and all sums paid or received by insurance companies as consideration for annuity contracts from the gross premiums tax base.
When insurance is procured from an insurance company that is not registered with the Pennsylvania Insurance Department and a licensed surplus lines agent is not involved, the insured must remit a report and payment of tax within 30 days of procurement of the insurance using tax form RCT-122. The tax rate on premiums paid to unauthorized foreign insurance companies is 2 percent of the taxable gross premiums on life insurance and 3 percent on all other types of insurance.
For detailed and historic Pennsylvania gross premiums tax information, please review the Tax Compendium.