Article 2. Basis Of Tax For Ocean Marine Insurance of California Revenue And Taxation Code >> Division 2. >> Part 7. >> Chapter 2. >> Article 2.

Every insurer transacting the business of ocean marine insurance in this State shall annually pay to the State a tax measured by that portion of the underwriting profit of the insurer from ocean marine insurance written in the United States, which the gross premiums of the insurer from ocean marine insurance written in this State bear to the gross premiums of the insurer from ocean marine insurance written within the United States, at the rate of 5 per cent.

The tax is in lieu of all other state, county and municipal taxes and licenses upon the marine insurer, except taxes upon real estate, any retaliatory exactions imposed by paragraph (3) of subdivision (f) of Section 28 of Article XIII of the Constitution, motor vehicle and other vehicle registration license fees and any other tax or license fee imposed by the state upon vehicles, motor vehicles or the operation thereof, and taxes assessed or levied against the insurer on account of any other class of insurance written by it.

Except as otherwise provided in Section 12105, the tax shall be computed each year upon the average annual underwriting profit of the insurer from ocean marine insurance during the preceding three calendar years.

If the insurer has transacted ocean marine insurance in this State in each of the three calendar years immediately preceding the year in which a tax return is required to be filed, the tax shall be computed as follows:
  (a) Divide the average annual premiums of the insurer from ocean marine insurance written by it in this State during the preceding three calendar years by the average annual premiums of the insurer from all ocean marine insurance written in the United States during such calendar years.
  (b) Multiply the insurer's average annual underwriting profit from ocean marine insurance written within the United States during the preceding three calendar years by the figure derived in (a).
  (c) Multiply the amount derived in (b) by 5 percent.

If the insurer has not transacted ocean marine insurance in this State in each of the three calendar years immediately preceding the year in which a tax return is required to be filed, its tax shall be computed on the basis of its premiums and underwriting profits in the last completed calendar year. As soon as the insurer comes within the terms of Section 12104, the taxes computed under the provisions of this section for the two preceding calendar years shall be adjusted to equal the amount of the first tax computed under Section 12104. The adjustment shall be shown as an addition to, or a credit against, the tax computed upon business done in the third calendar year or as soon thereafter as possible.

In computing the tax of a marine insurer issuing participating policies, there shall not be included in underwriting profit the amounts refunded by the insurer on account of premiums previously paid by its policyholders.

Whenever in this part the date, April 1st, is used as the beginning date for the computation of interest, attachment of penalties, or the fixing of periods of limitation, the date, June 15th, shall be substituted in lieu thereof with respect to taxes for ocean marine insurance.