“That combination means & Ellis recommend us but there is still room for upward trajectory. There are many others who unaware of the product.”
to lawfully avoid the withholding requirements of the Foreign Investment area as robust for the business.
The third area of growth relates to public companies, which are
increasingly purchasing tax insurance to protect themselves against unfavourable interpretations around the way they account for their tax liabilities, especially when they are operating in multiple jurisdictions.
tax insurance products—a product bought by companies with complex or uncertain tax positions. From 2013 to 2014, Concord experienced a
“We are experiencing phenomenal growth in this area but for very
other factors driving forward the growth here.”
energy tax credits, which have been used by the US government to encourage investment into the ‘clean, renewable energy’ sector. Tax equity investors don’t necessarily want to become experts in and negotiate about the nuances that could reduce or negate tax credits. They want relative certainty. But a recent court case held that if a sponsor of a tax credit investment provides too much certainty, the tax credits may be disallowed. The IRS has itself suggested that a tax equity investor obtain tax insurance to close the gap created.
“The inherently subjective nature of whether sponsor guarantees negate ‘partner’ status, coupled with the complex set of rules governing the allocation and allowance of tax credits, joined by the fact that the IRS is encouraging investors to get tax insurance,” De Berry says, “has resulted in something of a boon for us.”
He describes these as a historic problem in terms of the way the tax implications around investments are treated, especially where buyers want
net income, but also constitutes cash out the door as well as reputational harm. and fragile economy, deployment and redeployment of capital is a necessity that spawns tax uncertainty ,” says De Berry.
This sector is growing. He believes that about $350 million of capacity
is available now and this could increase to $500 million this year as new providers enter the market.
Two risks common to public companies involve tax-free reorganisations multinational company operating in more than one tax jurisdiction must decide how to allocate costs and assets across a business, ultimately having
confronts many companies. The tax authority in any of the jurisdictions they operate in could object to how they have done it. It is a problem for public companies and we are seeing growth in this area as a result.
“Responsible tax underwriting is a badge of tax accuracy for any public company, as well as risk transfer device and, when properly timed, a potential tool to render tax uncertainty to immaterial status (which could
Spring 2015 | INTELLIGENT INSURER | 29
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