R-817

November 3, 1947

Hon. George B, Butler, Chairman Board or Insurance Commissioners Austin, Texas Opinion No.,v-422.
Re: The liability ofYexloan Insurance Companies to Payagross premiums tax' onpolloiss lssurd In Texas.
Dear Sir:

lows: Your latter of October 1, 1947, reads as folWPlease advise mewhether 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 Article 5012a, are liable ror the tax lmpwsd byArticle 7064, Revlaed Clrll statutrs aa amended.
'"I? your answer is In the afilrmatlve, I assume that each aompang shall pay the tax upon its gross prbmlum lncomefrom pollcles lrausd In Texas less the deduotlone permitted byArtiale 7064. Plsase oonrirm or corr6Ct meas to thla."
Artlolr 5012a, V. C.

### 5, maker 

### aomprrhanslvs prwlslons ror Maxlcan Insurancra Eompanlas to 

### writ6lnsuranoe poll&s ln Texas aovaring parson8 ,a,ndtheir property but only while suoh parsons or property ,aro physloaUy within the boundaries or the Republlo orMexloo. It authorizes suah oompanirs to write pollolra of lnrruranos affording "any and all kinds of!automobile corerags, aooldent lnsuranae and/or other oaaualty coverage*. Sao Section 1at Artlols 5012a. Thla artlolr also oontamplattrr the payment of taxae by such lnsuranor companfas; provides that the deposit which Is required ofHon. George B. Butler, Page 2, V-422.

such companies shall beliable for taxes due the Stats or Texas; and provides In Seatlon 1 (a) as follows:

Wach oarrler siall pay the 8tatr of Texas annually apremium or oooupltlon tax upon Its gross premium lnaome from pollcl~es issued In Texas acoording to the reports madeto the Boardeaoh yaar, and shall pay suoh other tees ohargea andtaxee upon the samebaa s i as like Insurers llosnsed to dothe same klnds orbasins88 in the State 

## orTexas ,are required bylaw to pay; and shall makethe same reports a8 such other lloensed ca,rrlers, but in such adaptsd forms as maybe prescribed bysuoh Board for such purposes.W
WeaonstrUe Section 1 (e) to reqnira the payment bysuch companies of apremium or oooupatlon tax upon its gross premium income from ~oliciss lrupon the samebasis as like Insurers the samakinds of business in the Btate of Texas are required bylaw 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~ uponwhioh 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 ofthe lines of insurance authorized byArtitiLa 5012a, l

xaept personal aocldsnt insurande, which by the ‘terms or the last paragra h l xoludid from that article i ofArtlolo 7064 Is an 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 byArticle 5012a, ainor Article 7061,prwldrs for the payment or atex upon *the grors amOUIlt Ofprrmi~ms received uponproperty located in this State or onrisks looated in this State;” HowePar, suah a construotlon would have the eiieot of nUlIlfYl%Ii! t&r provisions orSection (01 of Artiole 5012a whereln It requires the payment Ofatax upon “8rOs8 Praaluarincome 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 onpremiums -collected onpolicies Issued onproperty and risks looated in this state. Byenaoting 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, weattribute 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 construction oontended for to the aontrary, would hare the effect of exempting such oompanirs from taxatlon,oontrary to the al,earintention of the Legislature when the&e acts are oonstrued together.

A.slm.llar contention might bemade.that premlums from pers,onal accident lnsuranoe written in Texas uponpersons residing or domiciled in othe~r,states are not aontemplated by Article 50i2a slnae Article 4769a levies 'atax 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 onpoliclea writt,en In Texa,a.rhaLl betaxad, 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 aeauritlss. 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 ooverage, to bein 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 7C Paiea, at 4, V.G.S., exce% t as to person31 accident lnsuranae, Ohio rate is prescribed byArticle 4769a, v. C.,,S.
Vary truly four8 :.

Wa:jap:jmo