                                                                   R-817




                             November 3, 1947

Hon. George B, Butler, Chairman
Board or Insurance  Commissioners
Austin, Texas
                               Opinion   No.,v-422.
                               Re:   The liability      of Yexloan
                                     Insurance     Companies to
                                     Pay a gross premiums tax'
                                     on polloiss     lssurd In
                                     Texas.
Dear Sir:
             Your latter   of October    1, 1947,     reads   as fol-
lows:
              WPlease advise me whether lnsuranar
        compa%les domlclled    In the Rapubllo of
        Mexloo, doing buslnasa     In the State or
        lkxas under the authority     of Senate Bill
        357, Aots 4.Sth~Laglslatura,     Vernon's Art-
        icle 5012a, are liable     ror the tax lm-
        pwsd by Article    7064, Revlaed Clrll stat-
        utrs aa amended.
              '"I? your answer is In the afilrma-
        tlve, I assume that each aompang shall
        pay the tax upon its gross prbmlum ln-
        come from pollcles    lrausd In Texas less
        the deduotlone   permitted  by Artiale  7064.
        Plsase oonrirm or corr6Ct me as to thla."
              Artlolr    5012a, V. C. 5, maker aomprrhanslvs
prwlslons      ror Maxlcan Insurancra Eompanlas to writ6 ln-
suranoe poll&s         ln Texas aovaring parson8 ,a,nd their
property    but only while suoh parsons or property ,aro
physloaUy      within the boundaries      or the Republlo or Mex-
loo.    It authorizes       suah oompanirs to write pollolra    of
lnrruranos affording        "any and all kinds of! automobile
corerags,     aooldent    lnsuranae  and/or other oaaualty    cover-
age*.     Sao Section 1 at Artlols       5012a.  Thla artlolr   also
oontamplattrr     the payment of taxae by such lnsuranor       com-
panfas;    provides    that the deposit which Is required      of
Hon. George B. Butler,        Page 2,    V-422.


such companies shall be liable   for taxes due the Stats
or Texas; and provides In Seatlon 1 (a) as follows:
              Wach oarrler siall pay the 8tatr
        of Texas annually     a premium or oooupl-
        tlon tax upon Its gross premium lnaome
       from pollcl~es issued In Texas acoording
       to the reports    made to the Board eaoh
       yaar, and shall pay suoh other tees
       ohargea and taxee upon the same baa i s
       as like Insurers     llosnsed   to do the same
       klnds or basins88 in the State or Texas
      ,are required    by law to pay; and shall
       make the same reports       a8 such other ll-
       oensed ca,rrlers,    but in such adaptsd
       forms as may be prescribed       by suoh Board
       for such purposes.W
             We aonstrUe Section 1 (e) to reqnira              the
payment by such companies of a premium or oooupatlon
 tax upon its gross premium income from ~oliciss                 lr-
                    upon the same basis as like Insurers
                    the sama kinds of business          in the
Btate of Texas are required            by law to pay.      The “same
kinds of businessn       means, to our minds, *automobile
ooreragr , accident      insurance      and/or othrr casualty
ooverags*.      Those   classes    of   business    are taxed Under
Article    7064, V. C. S., and Article .&769a, V. C. So
The %aels~ upon whioh nllke Insurer8w pay a tax 1s
3.5 per cent o? the groe8 premiums which, however,
is subjeot to aertain         reductions      depending upon the
lnvrstment     of assets    in Texas seaurltles.          It would
appear that Artlole        7064., V, C. S., would apply to
all of the lines of insurance            authorized    by ArtitiLa
5012a, lxaept personal         aocldsnt     insurande,   which by
the ‘terms or the last paragra h of Artlolo              7064 Is
lxoludid from that article           an i will be f'onnd to be
taxed under Artlols f+769p.,
             It has barn oontrndsd        that Artioh      7064
does not apply to the MIxloan Companlel rrgulated
by Article     5012a, ainor Article 7061, prwldrs           for
the payment or a tex upon *the grors amOUIlt Of prrm-
i~ms received     upon property     located    in this State
or on risks looated      in this State;”        HowePar, suah
a construotlon     would have the eiieot         of nUlIlfYl%Ii!
t&r provisions     or Section     (01 of Artiole 5012a where-
ln It requires     the payment Of a tax upon “8rOs8 Praa-
luar income from pollales       issued in Texas” end arrsumes
    Hon. George B. Butler;         Page 3,     V-422.


    that the "basis" of the tax necessarily             includes    the
    limitations    of Artlole    7064 that the tax be paid only
    on premiums -collected      on policies      Issued on property
    and risks looated      in this state.        By enaoting Article
    5012a, the Legislature       obviously     Intended to~levg a
    tax, and In order to give its provisions             meaning,~and
    to carry out the leglslatlvs         Intent,     we attribute     to
    the word "basis"     the meaning of,%ate*~together             with
    the formula, for reductions       in that rate depending upon
    the insursd~a'lnvestment       in Texas mcui’itles.~          The con-
    struction    oontended for to the aontrary,          would hare the
    effect    of exempting such oompanirs from taxatlon,oon-
    trary to the al,ear intention        of the Legislature        when
    the&e acts are oonstrued       together.
                 A.slm.llar   contention     might be made.that        prem-
.   lums    from pers,onal accident      lnsuranoe   written     in Texas
    upon persons residing        or domiciled     in othe~r, states      are
    not aontemplated       by Article    50i2a slnae Article        4769a
    levies 'a tax only upon premiums aolleoted             "iran ,persons
    residing    or domiciled in this State.*           But ,here;agaln,
    In giving efrect       to the obvious intentof         Article     5012a,
    it, Is ou? opinion that Article 5012a prescribes                that
    premiums on policlea       writt,en In Texa,a.rhaLl       be taxad,
    and that Article &'769a,d~etermines the rate and iormula
    for ieduation      of that rate v&m the prescribed             portion
    or the assets      of the Insurer     are investsd     In Texas ae-
    auritlss.
                                   SuMNbtiY
                    Mexican Insurance Companies operating
            undar Artiole    5012a, V. C, S., and writing
             pollalea   In Taras ~affording automoblle         cover-
           'age, accident    lnsuranoe    and/or oasualty       oover-
            age, to be in force only. while such ~pe~rsons
           ,'or propaTty are ,physloally      within t.he Repub;
            lit dr Mexloo, are required         to pay atax       upon
             the ,gross premiums from all such
             the rate presorlbbd     by ,Article    7CPaiea,
                                                        4, V.G.S.,at
             exce t as to person31 accident         lnsuranae,
            Ohio % rate is prescribed      by Article      4769a,
             v. C.,,S.
                                       Vary   truly   four8 :.




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