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: 

lows: 

Your latter of October 1, 1947, reads as folWPlease 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 Article 5012a, are liable ror the tax lmpwsd by Article 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 lncome 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 lnsuranoe 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 Mexloo. 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 1 at Artlols 5012a. Thla artlolr also 

oontamplattrr the payment of taxae by such lnsuranor companfas; 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 oooupltlon 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 lloensed 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 lrupon 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, l xaept personal aocldsnt insurande, which by 

the ‘terms or the last paragra h 

l xoludid from that article i 

of Artlolo 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 

by Article 5012a, ainor Article 7061, prwldrs for 

the payment or a tex upon *the grors amOUIlt Of prrmi~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 whereln It requires the payment Of a tax upon “8rOs8 Praaluar 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 construction oontended for to the aontrary, would hare the 

effect of exempting such oompanirs from taxatlon,oontrary to the al,ear intention of the Legislature when 

the&e acts are oonstrued together. 

A.slm.llar contention might be made.that premlums 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 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 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 7C Paiea, 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 :. 

Wa:jap:jmo